Blockchain Association Responds to Illinois Assembly Bill HB3479

Blockchain Association published a letter sent to Senator Laura Ellman and Representative Mark Walker of the Illinois Assembly stating industry opposition to HB 3479.

The following statement is attributed to Kristin Smith, Blockchain Association CEO:

“Illinois Assembly Bill HB 3479 would effectively outlaw crypto in the state, forcing crypto innovation to more welcoming jurisdictions. This bill imposes an onerous, uncertain, and likely expensive licensing regime. And intended or not, it would outright ban certain critical and exciting parts of crypto markets. We strongly urge the Illinois Assembly to reconsider this bill.”

According to the Association, the passage of DARA would “be detrimental to Illinois’s efforts to support innovation in the crypto and Web3 ecosystem throughout the state as the Act does not sufficiently account for the unique qualities of digital assets.”

While the Association agrees there should be robust protection for consumers, this bill “is onerous and burdensome for the industry.”

Imposing such a restrictive regulatory regime will “have an adverse effect on the state as it seeks to remain competitive in innovation and technology.”

The Blockchain Association urges the IL Assembly “to exercise restraint and not advance DARA w/o further examination of its impact.”

To date, Illinois has “been an important hub for crypto market innovation. However, the passage of DARA would be detrimental to Illinois’s efforts to support innovation in the crypto and Web3 ecosystem throughout the state.”

The Blockchain Association “agrees that a reporting framework tailored to the digital asset ecosystem—one that leverages its novel characteristics and addresses its novel challenges—will be best-equipped to promote consumer protection for activities involving digital assets.”

However, the Act does “not sufficiently account for the unique qualities of digital assets. In fact, the bill would effectively outlaw all of the crypto businesses that are currently thriving in Illinois unless they are able to navigate an onerous, uncertain, and likely expensive licensing regime.”

And intended or not, it “would outright ban certain critical and exciting parts of crypto markets that clearly cannot comply.”

They strongly “urge you to reconsider this bill.”

They fundamentally “agree with the bill’s premise that there should be robust protection for
consumers.”

Unfortunately, DARA would “not achieve the laudable goal of increased financial
security for Illinois residents.”

Rather, it “would likely drive innovation in the crypto and Web3 space to other states, just as the state of New York unfortunately did after it implemented its “BitLicense” regime in 2015.”

Since the implementation of the BitLicense, New York has “approved only thirty-one entities to engage in digital asset activities.”

The requirements of “obtaining a BitLicense, which bear many similarities to those DARA would create, have proven unworkable for many crypto companies, particularly for smaller startups that lack the resources to compete with incumbent financial institutions on the regime’s deeply onerous compliance costs.”

The BitLicense has “created an environment where only the biggest and most wealthy entities can manage to comply, while those who are just getting off the ground are left in the cold. Many jobs and opportunities that would have benefited New York are now benefiting states such as Colorado, Texas, and Wyoming.”

California recently “passed legislation that mirrored the New York regulation; however, Governor Newsom wisely vetoed the bill as his administration continues to explore how to effectively and safely implement blockchain technology in the state through responsible, thoughtful regulation.”

As noted in the letter:

“The Association and the blockchain industry have significant concerns with the policies and definitions proposed in DARA. The scope of actors and assets to which the Act applies is so broad that it would be devastating to a burgeoning crypto industry that has seen significant growth. Additionally, the Act grants the Illinois Department of Financial and Professional Regulation (IDFPR) with such sweeping interpretive, rulemaking, and enforcement powers that IDFPR could choose to ban all crypto companies from the state without any meaningful checks on that power.”


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