Illinois bitcoin ATMs to come under new regulation

A new bill, dubbed Senate Bill 2319, is being advanced by the Illinois Senate Executive Committee. This bill, if it passes, will see cryptocurrency ATM operators fall under new jurisdiction and regulation.

This comes as cryptocurrency use is at an all-time high, as is the industry's public visibility. There is growing concern about the semi-unregulated nature of the industry and more vocal calls for consumer protection, which might explain this new development.

The case of crypto ATMs

Crypto ATMs are, as the name would suggest, ATMs that allow users to deposit/withdraw cryptocurrency the way they would with a traditional ATM. Those looking to buy tokens of different types or send them to others can do so from ATMs. Oftentimes, this can be done with maximum privacy, which is a core feature of many crypto-related services.

Take casinos, for example: Typically, using an online casino would require you to reveal sensitive information such as your name, government ID, proof of address, and so on. But with cryptocurrency casinos, it is possible to do so without revealing your identity. The same applies to exchanges of all kinds. While there are crypto exchanges that require extensive know-your-customer procedures, others don't. It is very much possible to use a crypto exchange without ID verification.

Crypto ATMs enjoy an interesting position within the industry in that while they are tied to virtual currencies, they manifest in the material world. The growth of cryptocurrency means the use of crypto ATMs will only go up, and thus, lawmakers want them better regulated. 

Details of Bill 2319

This bill would see crypto ATMs in the state of Illinois put under the jurisdiction of the Illinois Department of Financial and Professional Regulation. This means that they will have to report their activities to the government body and pay fees as well.

“Currently, there are no regulations, no consumer protections, for crypto kiosks in Illinois. This bill establishes those consumer protections, and it also provides industry a predictable setting to not only operate, but also grow here in Illinois,” says State Senator Laura Ellman.

According to Coin ATM reader, there are just under 1,500 crypto ATMs in the state of Illinois, and thus, the department will have its work cut out for it. From a purely economic stance, there will be more accessible data regarding how much cryptocurrency is being used in the state and in what way. Official numbers regarding crypto transactions can be tricky given its decentralized nature, but the oversight of the department means more light will be shed.

From a consumer protection angle, this is also beneficial because crypto ATMs have been used in the past to defraud users.  Crypto investment scams, blackmail scams, and impersonation rings have been known to trick victims into handing over money via crypto ATMs. With better regulation in place, these incidents can be prevented through checks and balances, consumer education, and potentially payment tracking.