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A bill, HB3479, sponsored by Representative Mark L. Walker, has advanced in Illinois and should be a concern for what the proposal lays out for crypto, blockchain, and decentralized finance (DeFi).
The Bill In Illinois
On March 8, the bill was placed on the calendar’s second reading for a short debate and came roughly two weeks when Mark L. Walker filed it on February 17, 2023. At this stage, there are plans to make amends to several statutes describing the bill, which, if it becomes law, may affect Bitcoin and crypto valuations.
What’s worrying for parties and organizations opposing this bill is that should it be passed, it will only be weeks before the bill becomes law.
Though proponents of a section of the bill, labeled the Digital Assets Regulation Act (DARA), say it has received broader crypto industry support, only a few people know the proposal’s details and what it means.
When the bill was first filed, the proposer said the goal was to create a Uniform Money Transmission Modernization Act and the Digital Assets Regulation Act (DARA). However, should it become law, its provisions would exceed the statutes provided by the Transmitters of Money Act.
Specifically, under DARA, the Department of Financial and Professional Regulation shall regulate digital asset business activity in Illinois.
Under this act, there will be provisions to ensure client’s interests are protected while crypto businesses remain compliant with laid down rules.
There will be guidelines for how regulated crypto businesses should obtain licenses and further “restrictions and prohibitions.”
What DARA Means To Crypto and Blockchain Activities
Digging deeper, should DARA become law, it means digital asset activities not sanctioned by the state will be illegal. Those facilitating them will be committing a felony under Illinois rules. That permission will be required for crypto activity within the state would have far-reaching ramifications across the crypto, blockchain, DeFi, and even the NFT sector.
In essence, under conditions set by DARA, the bill would ban DeFi protocols and core blockchain infrastructure like block validation.
Last night in Illinois, a bill advanced that would make unlicensed “digital asset business activity” (i.e., most blockchain activities) a felony.
If the House passes the bill, it could become law in a matter of weeks.
Alliance opposes the Digital Assets Regulation Act (DARA).
— Alliance (@alliancedao) March 8, 2023
Subsequently, this would, in turn, set the base for the state to capture and control all activities driven by DeFi, mining, gaming, and more, even though they may be smart contracts driven.
Furthermore, the bill grants the state more powers to investigate unapproved digital asset transactions, even arrest facilitators whom they are convinced committed a felony.
Crypto remains under scrutiny from regulators, especially in the United States. In February, the Securities and Exchange Commission (SEC) said Paxos’ BUSD, a stablecoin, are unregistered securities. Later, the New York Department of Financial Services (NYDFS) ordered the stablecoin minter from issuing new tokens.