Crypto bill is not regulation industry needs

One in five Illinois residents owns or trades cryptocurrency and the Chicago market ranks nationally for crypto usage by residents. This once-fringe technology is now, officially, mainstream.

But lagging efforts to pass federal crypto regulation have had unfortunate consequences in Illinois, namely, a rushed attempt at state-level regulation that does more harm than good.

The Digital Assets and Consumer Protection Act is the Illinois General Assembly’s response to a lack of federal regulation. As well-intentioned as it may be, it fails to deliver any new consumer protection measures for Illinois residents while, at the same time, imposing expensive and onerous restrictions on the companies innovating in digital assets like blockchain and cryptocurrency.

The bill would establish an Illinois crypto license that could have an immediate and chilling effect on innovation. Startups will leave. Entrepreneurs will take their ideas to states where they are better supported. And consumers will pay the price.

Just look to New York, which requires a similar license to do business with its residents. Many New Yorkers are geoblocked by crypto and blockchain startups who either can’t afford the license or whose licenses have been delayed for years. Meanwhile, the bad actors who operate offshore will continue to engage with Illinois residents free of any restrictions. The policy just doesn’t work.

It’s not that crypto and blockchain companies don’t want regulation. They do. But the regulation must be narrow, workable and designed for the technology it governs. Unfortunately, a lack of understanding about this complex industry has spurred a bill that offers no upside.

Illinois consumers deserve better. Illinois policymakers must revisit SB1797, consider its unintended consequences and take their time to craft commonsense policy that actually works for Illinoisans.

Bob Kelsey

Berwyn