The Illinois Senate recently passed Senate Bill 1797, dubbed the Digital Assets and Consumer Protection Act. This purpose of this legislation is to stop cryptocurrency-related fraud and protect investors from unfair, deceptive, and abusive acts and practices. The bill, introduced by Senator Mark Walker in February, aims to provide regulatory oversight to the digital asset sector within the state.
Business activity regulation – Creates 220 ILCS 636 to give the Illinois Department of Financial and Professional Regulation jurisdiction over the conduct of businesses dealing in digital assets. The recent, landmark legislation has been aimed at protecting investors from large-scale financial harm.
The measure comes in the background of a series of shocking memecoin crashes caused by insiders and other types of scams. One illustrative case in point is the Libra token, a memecoin allegedly backed by Argentine President Javier Milei.
At one point, the market capitalization of the Libra token reached $42 million. It wrecked back down after co-creator Hayden Davis seemed to change a brand new WOLF token on March 16. Davis is perhaps best known as the co-creator of the Official Melania Meme (MELANIA) token. The Official Melania Meme (MELANIA) token subsequently experienced a jaw-dropping 94% price collapse. Insiders allegedly withdrew at least $107 million worth of liquidity, causing the massive crash.
Similar provisions in SB1797 are expressly designed to protect against rug pulls and disingenuous fee structures. The bill mandates registration with the state’s financial regulator for any entity engaging in digital asset business with Illinois residents.
“A person shall not engage in digital asset business activity, or hold itself out as being able to engage in digital asset business activity, with or on behalf of a resident unless the person is registered in this State by the Department under this Article [...],” - The bill states.
