Illinois may become 2nd state allowing financial services run on cryptocurrency

Illinois may become 2nd state allowing financial services run on cryptocurrency

The Illinois House unanimously passed a bill intended to help make Chicago and Illinois a hub for financial technology companies.

The Illinois House unanimously passed a bill to allow financial service companies that operate using cryptocurrency to apply for a charter in Illinois. If the bill becomes law, Illinois will be the second state to allow the practice.

“Our state has the opportunity to lead the way on blockchain technology and cryptoassets, which could make Illinois a hub for innovation and entrepreneurship for future generations – and all the jobs that come with it,” said the bill’s chief sponsor, state Rep. Margaret Croke, D-Chicago.

House Bill 3968 has the support of the Illinois Bankers Association, the Chicagoland Chamber of Commerce and other banking organizations that signed on in support of the bill. It is now before the Illinois Senate.

Illinois would be the second state in the nation to allow special trusts to hold digital assets after Wyoming, which drew digital asset bank Avanti and cryptocurrency exchange Kraken to the state with a similar measure in 2019.

The digital asset industry has grown steadily in recent years with the skyrocketing value of cryptocurrency, such as Bitcoin.

An Illinois Blockchain Business Development report produced by the Illinois Department of Financial and Professional Regulation in December stated worldwide investment in blockchain technology startups jumped from just $1 million in 2012 to $4.15 billion dollars in 2018, enticing thousands more to enter the market. The market value of all cryptocurrencies stands at about $758 billion, according to Statista.

But many digital asset companies have found banking with traditional institutions difficult given the significant cost to startups.

HB 3968 would lend stability to the industry by allowing financial technology companies to offer the same financial products as existing trusts, such as banking and payment services, in addition to other digital asset services, sponsors said.

Traditional financial institutions in Illinois have also voiced support for the bill, stating consumers will benefit and that boosting fintech and cryptocurrencies will drive positive economic growth.

“Illinois has every right to win in blockchain, given that we are a unique intersection of financial hub and real-economy hub (manufacturing, logistics, agriculture, etc.),” Outlier Ventures partner Rumi Morales told Payments Dive. “If we connect digital payments innovation to those sectors, the potential is huge.”

Want more? Get stories like this delivered straight to your inbox.

Thank you, we'll keep you informed!