Cryptocurrency regulation in most jurisdictions around the world is continually changing, with lawmakers and authorities introducing new rules to regulate the sector. In the United States, there have been multiple efforts to regulate the cryptocurrency market at the federal level, with several bills introduced at different times. However, the United States has been criticized for not being very supportive of cryptocurrencies and lagging behind other countries in creating rules for the sector. Illinois is now trying to fill regulatory gaps by introducing rules governing the industry.
Last year, the state legislature introduced the Digital Asset Regulation Act (DARA). Unfortunately, the bill was not passed until after the session was over and was recently introduced by State Senator Laura Ellman (D-IL).
A pro-cryptocurrency bill could have significant benefits for many parts of the Illinois economy across several sectors. For example, since the state already has a vibrant gaming economy, cryptocurrency-friendly rules could appeal to any developer looking to design a crypto casino app where users can stake using digital assets such as Bitcoin (BTC), Litecoin (LTC), Ether (ETH) USDT. Unfortunately, DARA does not seem to provide support and has been heavily criticized.
According to a X thread According to the bill from Crypto Accelerator and founding network Alliance, it is so severe that it would make “digital asset trading activity,” which includes blockchain activities, a crime. DARA also appears to ban decentralized finance (DeFi) protocols and applies harshly to most of the blockchain industry. This includes gaming, mining, trading, staking, and non-fungible tokens (NFTs). The Alliance also notes that the compliance requirements are very difficult, describing them as “impossible.”
The publication notes that DARA grants nearly unlimited rights to the Illinois Department of Financial and Professional Regulation (IDFPR). This gives the agency power over all parts of the industry and allows the IDFPR to adopt and enforce provisions. Generally speaking, DARA allows the agency to “administer, interpret, and enforce” the Act by setting any rules deemed “necessary and appropriate for the protection of its residents.” Additionally, since the agency can issue, refuse to issue, revoke, or suspend any license, the IDFPR may have blanket authority to take any action, regardless of whether or not an entity meets the requirements necessary for its operation.
At the agency’s discretion, DARA also extends IDFPR’s authority to any “covered person,” which can include potential licensees. Essentially, the agency can issue orders against any entity it deems to be a covered person, including subpoenas. IDFPR could also examine the records of these entities and “exercise visitation power.”
The law has been compared to the BitLicense regulation in New York, which also been heavily criticized due to difficulty of compliance. Enforced by the New York Department of Financial Services (DFS), most cryptocurrency stakeholders agree that the license is too expensive and difficult to comply with.
Many global stakeholders agree that some regulation is necessary to clean up the cryptocurrency sector. However, the situation in Illinois is worrying for stakeholders because it appears to stifle organic adoption. As cryptocurrency use cases increase, developers, especially in DeFi, are creating apps and services that facilitate everything from making cross-border payments to gaming. crypto poker at an online casino. Unfortunately, a bill like DARA could drive these companies out of Illinois and eliminate any chance for cryptocurrency innovation in the state.
