Illinois moves to lure crypto businesses

Illinois is rolling out the welcome mat for cryptocurrency investors and the firms that serve them.

Springfield is on the verge of clearing legislation that would establish a new state trust charter for companies that hold bitcoin and other digital currencies on behalf of investors. Gov. J.B. Pritzker is expected to sign it.

The bill, which passed the House unanimously on April 21, would make Illinois one of just a very few states to establish and regulate cryptocurrency deposit holders. Sponsors hope the initiative spawns a new industry creating jobs in a part of the tech world that’s growing rapidly.

Interest in bitcoin has grown from what many in the financial-services field deemed a puzzling and dubious curiosity into an investment class in which tens of billions trade daily in the U.S.

“We’re not scared of crypto and blockchain,” said freshman state Rep. Margaret Croke, D-Chicago, the bill’s chief sponsor. “We’re going to create a stable regulatory structure.”

In an interview, she likened the initiative to similar efforts to allow banks to service marijuana businesses. “This is giving a legal business a way to operate,” she said.

The bill would give the Illinois Department of Financial and Professional Regulation the authority to establish rules for companies seeking the new special purpose trust charter. The assets wouldn’t be insured like bank deposits are, but firms holding cryptocurrencies on behalf of clients would be required to have a substantial amount of U.S. dollars backing up the digital currencies.

Very few states have set up such structures so far. One of the few is Wyoming, home to Kraken Bank, one of the first in the nation specializing in safekeeping of cryptocurrencies.

via Crain’s Chicago Business

April 27, 2021 at 05:10PM

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