On February 21, 2023, the Illinois Department of Financial and Professional Regulation (IDFPR) unveiled a Consumer Financial Protection and Innovation Package, consisting of two legislative initiatives that aim to protect Illinois residents from financial fraud and abuse, while also establishing regulatory oversight of cryptocurrencies and other digital assets. The two proposals, otherwise known as the “Fintech-Digital Asset Bill” (HB 3479/SB 2233) and the “Consumer Financial Protection Bill” (HB 3483/SB 2232), are both sponsored by Representative Mark Walker and Senator Laura Ellman.

The following is a breakdown of the proposed Fintech-Digital Asset Bill:

• Seeks to modernize regulations for money transmission in Illinois and establish regulations for digital asset businesses.
• Requires digital asset exchanges and other digital asset businesses to obtain a license from IDFPR to operate in Illinois (similar to the regulation in place in New York and under consideration in California).
• Replaces the Transmitters of Money Act with the Money Transmission Modernization Act, harmonizing state licensing, regulation, and supervision of money transmitters operating across state lines.
• Requires companies to have plans and procedures for addressing critical risks such as cybersecurity, business continuity, fraud, and money laundering.
• Allows for the creation of trust companies for the special purpose of acting as a fiduciary to safeguard customers' digital assets.
• Establishes robust customer protections, such as investment disclosures, customer asset safeguards, and customer service standards.

The proposed Consumer Financial Protection Bill does the following:

• Aims to empower the IDFPR to enforce the Fintech-Digital Asset Bill as well as existing consumer financial protection laws.
• Brings the Illinois Financial Institutions Code and other statutes in line with more recently-enacted consumer protection measures, such as the Student Loan Servicing Rights Act.
• Modeled after the law that created the federal Consumer Financial Protection Bureau, the bill makes Illinois a national leader in consumer financial protection by targeting unfair, deceptive, and abusive acts and practices by unlicensed financial services providers.

IDFPR Secretary Mario Treto, Jr. expressed his enthusiasm for these proposals, saying "States occupy a core role in overseeing the financial marketplace and Illinois stands ready to usher in the future of consumer financial protection. These two proposals combined will bring Illinois consumer financial protection into the digital age and provide 21st Century protections for 21st Century threats." Similarly, Senator Laura Ellman believes that these bills will set the foundation for sound and sustainable innovation and growth for years to come, while also providing much-needed protections to keep Illinois consumers safe and their investments secure.