Illinois Eases Burden for Cryptocurrency Startups with New Guidance

Illinois Eases Burden for Cryptocurrency Startups with New Guidance

The financial regulatory arm of the state of Illinois has clarified its rules for digital currency companies operating in the state.

Announced yesterday by the Illinois Department of Financial and Professional Regulation (IDFPR), the completed regulatory guidance clarified that digital currency is not captured under the definition of money used in the state's Transmitters of Money Act (TOMA). The final announcement was published after nearly six months after the agency's initial request for comments.

The guidance also clarified activities that are generally regarded as 'money transmission', including the exchange of digital currency for money through a third-party exchanger or an automated machine. Digital currency businesses whose practices meet these definitions will now need to secure a TOMA license.

Other activities such as miners receiving digital currency for verifying transactions, exchanging only between digital currencies and exchanging digital currency for money between two parties are excluded from this category.

Perhaps most notably, however, the IDFPR went on to state that industry startups can use cryptocurrencies as permissible investments, arguing that capital requirements in traditional currencies imposed "added burdens" on smaller operations.

The report reads:

"The [IDFPR] understands dollar-denominated capital reserve requirements impose added burdens on digital currency companies and therefore will consider digital currency reserves as a form of permissible investment."

Elsewhere, the IDFPR said it will allow applicants to consider digital currency they own or hold as part of their net worth, though such a recognition does not include any digital currency held on behalf of others.