Illinois to Regulate Cryptocurrency with a BitLicense-like Framework

02/27/2023 14:13 • Tech Ticker • 122 views

It is reported that the US state of Illinois will follow the example of New York to develop a cryptocurrency regulatory system, requiring cryptocurrency companies to seek a license similar to New York’s BitLicense, and will also establish a trust company that can handle the custody of digital assets. Cryptocurrency trading platforms and other virtual asset enterprises must provide investment disclosure, protect customer assets, take defensive measures to prevent hacker attacks, and protect themselves from being used for money laundering.

Illinois will follow the example of New York to develop a cryptocurrency regulatory system

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The US state of Illinois is reportedly following the path of New York in developing a regulatory regime for cryptocurrencies. The move is in response to a growing need to curb the proliferation of virtual assets, which despite their potential to transform finance and commerce, are often fraught with risks related to fraud, hacking, and money laundering.

The proposed regulatory system in Illinois will require cryptocurrency firms to obtain a license similar to New York’s BitLicense, which has been in place since 2015. The BitLicense is a legal framework that establishes a set of rules and requirements that businesses wishing to engage in virtual currency activities in New York must comply with. These rules cover a wide range of areas, including customer verification, cybersecurity, transaction recording, and financial reporting.

In addition to the BitLicense-like framework, Illinois will establish a trust company that can handle the custody of digital assets. Custody services are critical for crypto investors who want to store their assets securely without having to worry about hacking or theft. By establishing a trust company, Illinois hopes to attract more crypto firms to the state and to provide a safer environment for crypto investments.

Under the proposed system, cryptocurrency trading platforms and other virtual asset enterprises will be required to provide investment disclosure, protect customer assets, take defensive measures to prevent hacker attacks, and protect themselves from being used for money laundering. These measures aim to promote transparency and accountability in the crypto industry and to mitigate some of the risks associated with virtual assets.

Illinois’ move to regulate cryptocurrencies is not surprising, given the growing trend among US states and global regulators to introduce rules and guidelines for virtual assets. Crypto regulation is increasingly viewed as a necessary step toward promoting innovation and growth in the crypto industry while protecting investors and consumers from fraud and other forms of abuse.

In conclusion, Illinois’ decision to follow New York’s lead and develop a BitLicense-like framework for cryptocurrencies is a positive step toward establishing a safer and more stable crypto ecosystem. By promoting oversight and accountability, Illinois hopes to attract more crypto firms to the state and to provide a better environment for crypto investments. However, the success of the regulatory system will depend on how well it balances the need for innovation and growth with the need for consumer protection and risk mitigation.

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