Lawmakers in the Illinois Senate have passed new legislation to protect users against common crypto fraud in the region.
The Illinois Senate has passed a bill to regulate digital assets firms operating in the state. The new law responds to a rise in scams and fraud cases, particularly those involving meme coins. The new regulatory framework seeks to address how many of these scam tokens have led to financial losses for investors.
Senate Bill 1797 to Establish Crypto Rules
The Illinois Senate voted 39 to 17 in favor of Senate Bill 1797, also known as the Digital Assets and Consumer Protection Act. The bill, introduced by Senator Mark Walker in February, gives the Illinois Department of Financial and Professional Regulation the authority to oversee digital asset businesses serving state residents.
Under the new rules, any company or individual rendering digital assets services in Illinois must register with the department. This includes organizations involved in cryptocurrency exchange services, trading, or storage.
No individual or company can offer crypto services to Illinois residents without registration. Even advertising services without approval would be a violation.
According to the update, businesses must also disclose all user fees before providing any service. The report’s goal is to create transparency and stop misleading users with hidden charges.
Senator Walker said the bill was necessary due to the rise in fraud in the crypto space. There has recently been a wave of scams, including a case in which the Gotbit founder pleaded guilty to crypto-related fraud.
While crypto innovations provide some financial opportunities, the Senator noted that they also come with risks, such as deception and sudden collapse. The bill has the prerogative to set clear standards and protect everyday people from scam tokens.
The legislation has been moved to the Illinois House for further discussion. If passed by the House, it will then be sent to the governor for final approval.
Meme Coin Scandals Spark Demand for Oversight
It is worth noting that this legislative push follows a series of scandals involving meme coins.These are digital tokens often driven by internet trends and are sometimes promoted by public figures. While they tend to attract quick attention and hype, they are just as likely to crash suddenly, leaving investors with heavy losses.
One recent case involved the controversial meme coin known as the Libra token, linked to Argentine President Javier Milei. In March, insiders reportedly pulled out over $100 million in liquidity, triggering a 94% crash and wiping out an estimated $4.5 billion in market value.
Another figure, Hayden Davis, was behind both the Libra token and a token called WOLF. Reports show over 80% of WOLF’s supply remains under the control of one entity. When it was sold off, the token dropped by 99%. These cases have raised calls for stronger oversight, with one Argentine lawyer asking Interpol to issue a Red Notice for Davis.
Lawmakers in Illinois believe the new bill is a step toward protecting residents and creating rules in an industry that has grown with little control.
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