Illinois Cryptocurrency Laws
Relevant Statute
205 ILCS 657
“Money” Definition
“Money” means a medium of exchange that is authorized or adopted by a domestic or foreign government as a part of its currency and that is customarily used and accepted as a medium of exchange in the country of issuance.
“Money Transmitter” Definition
“Money transmitter” means a person who is located in or doing business in this State and who directly or through authorized sellers does any of the following in this State:
(1) Sells or issues payment instruments.
(2) Engages in the business of receiving money for transmission or transmitting money.
(3) Engages in the business of exchanging, for compensation, money of the United States Government or a foreign government to or from money of another government.
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Additional Definitions
“Payment instrument” means a check, draft, money order, traveler’s check, stored value card, or other instrument or memorandum, written order or written receipt for the transmission or payment of money sold or issued to one or more persons whether or not that instrument or order is negotiable. Payment instrument does not include an instrument that is redeemable by the issuer in merchandise or service, a credit card voucher, or a letter of credit. A written order for the transmission or payment of money that results in the issuance of a check, draft, money order, traveler’s check, or other instrument or memorandum is not a payment instrument. “Transmitting money” means the transmission of money by any means, including transmissions to or from locations within the United States or to and from locations outside of the United States by payment instrument, facsimile or electronic transfer, or otherwise, and includes bill payment services.
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Exemptions
Sec. 15. Exemptions. The following are exempt from the licensing requirements of this Act:
(1) The United States and any department or agency of the United States.
(2) This State and any political subdivision of this State.
(3) Banks, trust companies, building and loan associations, savings and loan associations, savings banks, or credit unions, licensed or organized under the laws of any state or of the United States and any foreign bank maintaining a branch or agency licensed or organized under the laws of any state or of the United States.
(4) Currency exchanges licensed under the Currency Exchange Act are exempt from licensing only for (i) the issuance of money orders or (ii) the sale, loading, or unloading of stored value cards.
(5) Corporations and associations exempt under item (3) or (4) from the licensing requirements of this Act are not exempt from approval by the Director as authorized sellers. Nothing in this Act shall be deemed to enlarge the powers of those corporations and associations.
(6) An operator of a payment system to the extent that it provides processing, clearing, or settlement services between or among persons exempt under this Section in connection with wire transfers, credit card transactions, debit card transactions, stored value transactions, automated clearing house transfers, or similar funds transfers.
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Registration Fees
(a) The Director shall charge and collect fees, which shall be nonrefundable unless otherwise indicated, in accordance with the provisions of this Act as follows:
(1) For applying for a license, an application fee of $100 and a license fee, which shall be refunded if the application is denied or withdrawn, of $100 plus $10 for each location at which the applicant and its authorized sellers are conducting business or propose to conduct business excepting the applicant’s principal place of business.
(2) For renewal of a license, a fee of $100 plus $10 for each location at which the licensee and its authorized sellers are conducting business, except the licensee’s principal place of business.
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Bond and Insurance Requirements
(a) An applicant for a license shall post and a licensee must maintain with the Director a bond or bonds issued by corporations qualified to do business as surety companies in this State.
(b) The applicant or licensee shall post a bond in the amount of $50,000 or an amount equal to 1% of all Illinois-based activity, whichever is greater, up to a maximum amount of $2,000,000. When the amount of the required bond exceeds $1,000,000, the applicant or licensee may, in the alternative, post a bond in the amount of $1,000,000 plus a dollar for dollar increase in the net worth of the applicant or licensee over and above the amount required in Section 20, up to a total amount of $2,000,000.
(c) The bond must be in a form satisfactory to the Director and shall run to the State of Illinois for the benefit of any claimant against the applicant or licensee with respect to the receipt, handling, transmission, and payment of money by the licensee or authorized seller in connection with the licensed operations. A claimant damaged by a breach of the conditions of a bond shall have a right to action upon the bond for damages suffered thereby and may bring suit directly on the bond, or the Director may bring suit on behalf of the claimant.
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Capital Requirements
(a) In order to obtain a license under this Act, an applicant must prove to the satisfaction of the Director all of the following: 1) That the applicant has and maintains the net worth specified in Column A, computed according to generally accepted accounting principles, corresponding to the number of locations in this State at which the applicant is conducting business or proposes to conduct business by itself and by any authorized sellers specified in Column B:
Column A Column B
$35,000 1
50,000 2-3
100,000 4-5
150,000 6-9
200,000 10-14
300,000 15-19
400,000 20-24
500,000 25 or more
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State Comments or Statements
State issued guidance found that virtual currencies are not “money” under the Transmitters of Money Act and therefore “[a] person or entity engaged in the transmission fo solely digital currencies, as defined, would not be required to obtain a TOMA license.”
https://www.idfpr.com/Forms/DFI/CCD/IDFPR%20-%20Digital%20Currency%20Regulatory%20Guidance.pdf