Why this crypto bill moving forward in Illinois is worrying for DeFi, NFT, gaming and blockchain
A bill, HB3479, sponsored by Representative Mark L. Walker, has advanced in Illinois and should be a concern for what the proposal spells 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 brief debate and came about two weeks when Mark L. Walker introduced it on February 17, 2023. At this stage, there are plans to make changes to several statutes that describe the bill, which , if passed, could affect Bitcoin and crypto values.
What is worrying for parties and organizations opposing this bill is that, should it be passed, it will only be weeks before the bill becomes law.
Although supporters of one part of the bill, labeled the Digital Assets Regulation Act (DARA), say it has received broader support from the crypto industry, only a few know the details of the proposal and what it means.
When the bill was first submitted, the proposer was so the goal was to create a unified Money Transmission Modernization Act and Digital Assets Regulation Act (DARA). However, should it become law, the provisions would exceed the statutes provided by the Money Transfer Act.
Specifically, under DARA, the Department of Financial and Professional Regulation will regulate digital asset businesses in Illinois.
Under this law, there will be provisions to ensure that customer interests are protected while crypto businesses remain in compliance with set rules.
There will be guidelines for how regulated crypto businesses must obtain licenses and further “restrictions and prohibitions”.
What DARA means for crypto and blockchain activities
Digging deeper, if DARA were to become law, it would mean that digital asset activities not sanctioned by the government would be illegal. Those who facilitate them will commit a felony under Illinois law. That permission will be required for crypto activity in the state will have far-reaching consequences across the crypto, blockchain, DeFi and even NFT sectors.
Essentially, under conditions set by DARA, the bill would ban DeFi protocols and core blockchain infrastructure such as block validation.
Last night in Illinois, a bill was introduced that would make unlicensed “digital asset business activity” (ie most blockchain activity) a felony.
If the House passes the bill, it could become law within a few weeks.
The Alliance opposes the Digital Assets Regulation Act (DARA).
— Alliance (@alliancedao) March 8, 2023
Then, this in turn will lay the groundwork for the state to capture and control all activities driven by DeFi, mining, gaming and more, even though they may be smart contract driven.
Furthermore, the bill gives the state more powers to investigate unauthorized transactions of digital assets, even arresting facilitators who they are convinced have committed a crime.
Crypto is still under scrutiny from regulators, especially in the US. 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.
Feature image from Canva, chart from TradingView
