Rep. Edgar González, Jr.

Filed: 4/7/2025

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LRB104 04637 BAB 25026 a

1 AMENDMENT TO HOUSE BILL 742

2 AMENDMENT NO. ______. Amend House Bill 742 by replacing

3 everything after the enacting clause with the following:

4 "Article 1. General Provisions

5 Section 1-1. Short title. This Act may be cited as the

6 Digital Assets and Consumer Protection Act.

7 Section 1-5. Definitions.

8 (a) As used in this Act:

9 "Affiliate" means any person that controls, is controlled

10 by, or is under common control with another person. For

11 purposes of this definition, "control" means the possession,

12 direct or indirect, of the power to direct or cause the

13 direction of the management and policies of a person.

14 "Applicant" means a person that applies for registration

15 under this Act.

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1 "Bank" means a bank, savings banks, savings and loan

2 association, savings association, or industrial loan company

3 chartered under the laws of this State or any other state or

4 under the laws of the United States.

5 "Confidential supervisory information" means information

6 or documents obtained by employees, agents, or representatives

7 of the Department in the course of any examination,

8 investigation, audit, visit, registration, certification,

9 review, licensing, or any other regulatory or supervisory

10 activity pursuant to this Act, and any record prepared or

11 obtained by the Department to the extent that the record

12 summarizes or contains information derived from any report,

13 document, or record described in this Act.

14 "Conflict of interest" means an interest that might

15 incline a covered person or an individual who is an associated

16 person of a covered person to make a recommendation that is not

17 disinterested.

18 "Corporate fiduciary" shall mean a corporate fiduciary as

19 defined by Section 1-5.05 of the Corporate Fiduciary Act.

20 "Covered person" means a registrant or person required to

21 register pursuant to this Act.

22 "Covered exchange" means a covered person that exchanges

23 or holds itself out as being able to exchange a digital asset

24 for a resident.

25 "Credit union" means a credit union chartered under the

26 laws of this State or any other state or under the laws of the

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1 United States.

2 "Department" means the Department of Financial and

3 Professional Regulation.

4 "Digital asset" means a digital representation of value

5 that is used as a medium of exchange, unit of account, or store

6 of value, and that is not fiat currency, whether or not

7 denominated in fiat currency. "Digital asset" does not include

8 any of the following:

9 (1) A digital representation of value which a merchant

10 grants, as part of an affinity or rewards program, and

11 that cannot be taken from or exchanged with the merchant

12 for fiat currency or a digital asset.

13 (2) A digital representation of value that is issued

14 by or on behalf of a game publisher, used solely within a

15 gaming platform, has no market or application outside of

16 such gaming platform, and cannot be converted into, or

17 redeemed for, fiat currency or digital assets.

18 (3) A digital representation of value that is used as

19 part of prepaid cards.

20 "Digital asset administration" means controlling,

21 administering, or issuing a digital asset. "Digital asset

22 administration" does not include the issuance of a

23 non-fungible token in and of itself.

24 "Digital asset business activity" means any of the

25 following:

26 (1) Exchanging, transferring, or storing a digital

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1 asset.

2 (2) Engaging in digital asset administration.

3 (3) Any other business activity involving digital

4 assets designated by rule by the Department as may be

5 necessary and appropriate for the protection of residents.

6 "Digital asset business activity" does not include (1)

7 peer-to-peer exchanges or transfers of digital assets, (2)

8 decentralized exchanges facilitating peer-to-peer exchanges or

9 transfers solely through use of a computer program or a

10 transaction protocol that is intended to automatically

11 execute, control, or document events and actions, and (3) the

12 development and dissemination of software in and of itself.

13 "Exchange", when used as a verb, means to exchange, buy,

14 sell, trade, or convert, on behalf of a resident, either of the

15 following:

16 (1) A digital asset for fiat currency or one or more

17 forms of digital assets.

18 (2) Fiat currency for one or more forms of digital

19 assets.

20 "Exchange" does not include buying, selling, or trading

21 digital assets for a person's own account in a principal

22 capacity.

23 "Executive officer" includes, without limitation, an

24 individual who is a director, officer, manager, managing

25 member, partner, or trustee, or other functionally equivalent

26 responsible individual, of a person.

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1 "Federally insured depository institution" shall mean an

2 insured depository institution as defined by Section 3(c)(2)

3 of the Federal Deposit Insurance Act, 12 U.S.C. 1813(c)(2), as

4 amended, or an insured credit union as defined by Section

5 101(7) of the Federal Credit Union Act, 12 U.S.C. 1752(7), as

6 amended.

7 "Fiat currency" means a medium of exchange or unit of

8 value issued by the United States or a foreign government and

9 that is designated as legal tender in its country of issuance.

10 "Insolvent" means any of the following:

11 (1) Having generally ceased to pay debts in the

12 ordinary course of business other than as a result of a

13 bona fide dispute.

14 (2) Being unable to pay debts as they become due.

15 (3) Being insolvent within the meaning of federal

16 bankruptcy law.

17 "Non-fungible token" means any unique digital identifier

18 on any blockchain or digital asset network used to certify

19 authenticity and ownership rights that is not readily

20 exchangeable or replaceable with a mutually interchangeable

21 digital asset of the same value. The Department may modify

22 this definition by rule.

23 "Person" includes, without limitation, any individual,

24 corporation, business trust, estate, trust, partnership,

25 proprietorship, syndicate, limited liability company,

26 association, joint venture, government, governmental

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1 subsection, agency or instrumentality, public corporation or

2 joint stock company, or any other organization or legal or

3 commercial entity.

4 "Prepaid card" means an electronic payment device that,

5 subject to any rules adopted by the Department:

6 (1) is usable at a single merchant or an affiliated

7 group of merchants that share the same name, mark, or

8 logo, or is usable at multiple, unaffiliated merchants or

9 service providers;

10 (2) is issued in and for a specified amount of fiat

11 currency;

12 (3) can be reloaded in and for only fiat currency, if

13 at all;

14 (4) is issued or reloaded on a prepaid basis for the

15 future purchase or delivery of goods or services;

16 (5) is honored upon presentation;

17 (6) can be redeemed in and for only fiat currency, if

18 at all;

19 (7) is governed by the Uniform Money Transmission

20 Modernization Act; and

21 (8) complies with any other condition designated by

22 rule by the Department as may be necessary and appropriate

23 for the protection of residents.

24 "Qualified custodian" means a bank, credit union, or trust

25 company, subject to any rules adopted by the Department.

26 "Record" means information that is inscribed on a tangible

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1 medium or that is stored in an electronic or other medium and

2 is retrievable in perceivable form.

3 "Registrant" means a person registered under this Act.

4 "Resident" means any of the following:

5 (1) A person who is domiciled in this State.

6 (2) A person who is physically located in this State

7 for more than 183 days of the previous 365 days.

8 (3) A person who has a place of business in this State.

9 (4) A legal representative of a person that is

10 domiciled in this State.

11 "Request for assistance" means all inquiries, complaints,

12 account disputes, and requests for documentation a covered

13 person receives from residents.

14 "Responsible individual" means an individual who has

15 direct control over, or significant management, policy, or

16 decision-making authority with respect to, a person's digital

17 asset business activity in this State.

18 "Secretary" means the Secretary of Financial and

19 Professional Regulation and any authorized representative of

20 the Secretary.

21 "Service provider" means any person that provides a

22 material service to a covered person in connection with the

23 offering or provision by that covered person of a digital

24 asset business activity in this State, including a person that

25 either:

26 (1) Participates in designing, operating, or

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1 maintaining the digital asset business activity.

2 (2) Processes transactions relating to the digital

3 asset business activity, other than unknowingly or

4 incidentally transmitting or processing financial data in

5 a manner that the data is undifferentiated from other

6 types of data of the same form as the person transmits or

7 processes.

8 "State" means a state of the United States, the District

9 of Columbia, Puerto Rico, the United States Virgin Islands, or

10 any territory or insular possession subject to the

11 jurisdiction of the United States.

12 "Store," "storage", and "storing", except in the phrase

13 "store of value," means to store, hold, or maintain custody or

14 control of a digital asset on behalf of a resident by a person

15 other than the resident.

16 "Transfer" means to transfer or transmit a digital asset

17 on behalf of a resident, including by doing any of the

18 following:

19 (1) Crediting the digital asset to the account or

20 storage of another person.

21 (2) Moving the digital asset from one account or

22 storage of a resident to another account or storage of the

23 same resident.

24 (3) Relinquishing custody or control of a digital

25 asset to another person.

26 "United States dollar equivalent of digital assets" means

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1 the equivalent value of a particular digital asset in United

2 States dollars shown on a covered exchange regulated in the

3 United States for a particular date or period specified in

4 this Act, subject to any rules adopted by the Department.

5 (b) Whenever the terms "include", "including" or terms of

6 similar import appear in this Act, unless the context requires

7 otherwise, such terms shall not be construed to imply the

8 exclusion of any person, class, or thing not specifically

9 included.

10 (c) A reference in this Act to any other law or statute of

11 this State, or of any other jurisdiction, means such law or

12 statute as amended to the effective date of this Act, and

13 unless the context otherwise requires, as amended thereafter.

14 (d) Any reference to this Act shall include any rules

15 adopted in accordance with this Act.

16 Section 1-10. Applicability.

17 (a) This Act governs the digital asset business activity

18 of a person doing business in this State or, wherever located,

19 who engages in or holds itself out as engaging in the activity

20 with or on behalf of a resident, to the extent not preempted by

21 federal law and except as otherwise provided in subsections

22 (b), (c), (d), or (e).

23 (b)(1) This Act does not apply to the exchange, transfer,

24 or storage of a digital asset or to digital asset

25 administration to the extent that:

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1 (A) the Securities Exchange Act of 1934, 15 U.S.C.

2 78a et seq., or the Illinois Securities Law of 1953

3 govern the activity as a security transaction and the

4 activity is regulated by the U.S. Securities and

5 Exchange Commission or the Illinois Secretary of

6 State; or

7 (B) the Commodity Exchange Act, 7 U.S.C. 1 et

8 seq., governs the activity, the activity is in

9 connection with trading of a contract of sale of a

10 commodity for future delivery, an option on such a

11 contract or a swap, and the activity is regulated by

12 the U.S. Commodity Futures Trading Commission.

13 (2) This subsection shall be construed in a manner

14 consistent with affording the greatest protection to

15 residents and the Department's authority under subsection

16 (a) of Section 1-15 to exercise nonexclusive oversight and

17 enforcement under any federal law applicable to digital

18 asset business activity. This subsection shall not be

19 construed to exempt an activity solely because a financial

20 regulatory agency has anti-fraud and anti-manipulation

21 enforcement authority over the activity.

22 (c) This Act does not apply to the following persons:

23 (1) The United States, a State, political subdivision

24 of a State, agency, or instrumentality of federal, State,

25 or local government, or a foreign government or a

26 subdivision, department, agency, or instrumentality of a

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1 foreign government.

2 (2) A federally insured depository institution.

3 (3) A corporate fiduciary acting as a fiduciary or

4 otherwise engaging in fiduciary activities.

5 (4) A merchant using digital assets solely for the

6 purchase or sale of goods or services, excluding the sale

7 of purchase of digital assets, in the ordinary course of

8 its business.

9 (5) A person using digital assets solely for the

10 purchase or sale of goods or services for his or her own

11 personal, family, or household purposes.

12 (6) A credit union with member share accounts insured

13 by an insurer approved by the credit union's primary

14 financial regulatory agency. An out-of-state credit union

15 may not conduct any activity in this State that is not

16 authorized for a credit union chartered under the laws of

17 this State.

18 Nothing in this Act grants persons described in this

19 subsection (c) authority to engage in any activity not

20 otherwise granted under existing law.

21 (d) The Department may by rule or order clarify whether an

22 activity is governed under this Act or another Act that

23 governs money transmission. This subsection (d) shall not be

24 applied in a manner inconsistent with the protection of

25 residents.

26 (e) Notwithstanding any other provision of this Act, the

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1 Department, by rule or order, may conditionally or

2 unconditionally exempt any person, digital asset, or

3 transaction, or any class or classes of persons, digital

4 assets, or transactions, from any provision of this Act or of

5 any rule thereunder, to the extent that the exemption is

6 necessary or appropriate, in the public interest, and

7 consistent with the protection of residents.

8 Section 1-15. General powers and duties.

9 (a) The Department shall regulate digital asset business

10 activity in this State, unless it is exempt pursuant to

11 Section 1-10. To the extent permissible under federal law, the

12 Department shall exercise nonexclusive oversight and

13 enforcement under any federal law applicable to digital asset

14 business activity.

15 (b) The functions, powers, and duties conferred upon the

16 Department by this Act are cumulative to any other functions,

17 powers, and duties conferred upon the Department by other laws

18 applicable to digital asset business activity.

19 (c) The Department shall have the following functions,

20 powers, and duties in carrying out its responsibilities under

21 this Act and any other law applicable to digital asset

22 business activity in this State:

23 (1) to issue or refuse to issue any registration or

24 other authorization under this Act;

25 (2) to revoke or suspend for cause any registration or

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1 other authorization under this Act;

2 (3) to keep records of all registrations or other

3 authorizations under this Act;

4 (4) to receive, consider, investigate, and act upon

5 complaints made by any person relating to any digital

6 asset business activity in this State;

7 (5) to prescribe the forms of and receive:

8 (A) applications for registrations or other

9 authorizations under this Act; and

10 (B) all reports and all books and records required

11 to be made under this Act;

12 (6) to subpoena documents and witnesses and compel

13 their attendance and production, to administer oaths, and

14 to require the production of any books, papers, or other

15 materials relevant to any inquiry authorized by this Act

16 or other law applicable to digital asset business activity

17 in this State;

18 (7) to issue orders against any person:

19 (A) if the Secretary has reasonable cause to

20 believe that an unsafe, unsound, or unlawful practice

21 has occurred, is occurring, or is about to occur;

22 (B) if any person has violated, is violating, or

23 is about to violate any law, rule, or written

24 agreement with the Secretary; or

25 (C) for the purpose of administering the

26 provisions of this Act or other law applicable to

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1 digital asset business activity and any rule adopted

2 in accordance with this Act or other law applicable to

3 digital asset business activity;

4 (8) to address any inquiries to any covered person, or

5 the directors, officers, or employees of the covered

6 person, or the affiliates or service providers of the

7 covered person, in relation to the covered person's

8 activities and conditions or any other matter connected

9 with its affairs, and it shall be the duty of any person so

10 addressed to promptly reply in writing to those inquiries;

11 the Secretary may also require reports from any covered

12 person at any time the Secretary chooses;

13 (9) to examine the books and records of every covered

14 person, affiliate, or service provider;

15 (10) to enforce the provisions of this Act and any

16 state or federal law applicable to digital asset business

17 activity;

18 (11) to levy fees, fines, and civil penalties, charges

19 for services, and assessments to defray operating

20 expenses, including direct and indirect costs, of

21 administering this Act and other laws applicable to

22 digital asset business activity;

23 (12) to appoint examiners, supervisors, experts, and

24 special assistants as needed to effectively and

25 efficiently administer this Act and other laws applicable

26 to digital asset business activity;

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1 (13) to conduct hearings for the purpose of carrying

2 out the purposes of this Act;

3 (14) to exercise visitorial power over a covered

4 person, affiliate, or service provider;

5 (15) to enter into cooperative agreements with federal

6 and state regulatory authorities and to accept reports of

7 examinations from federal and state regulatory

8 authorities;

9 (16) to assign on an emergency basis an examiner or

10 examiners to monitor the affairs of a covered person,

11 affiliate, or service provider with whatever frequency the

12 Secretary determines appropriate and to charge the covered

13 person for reasonable and necessary expenses of the

14 Secretary if in the opinion of the Secretary an emergency

15 exists or appears likely to occur;

16 (17) to impose civil penalties against a covered

17 person, affiliate, or service provider for failing to

18 respond to a regulatory request or reporting requirement;

19 and

20 (18) to conduct investigations, market surveillance,

21 and research, studies, and analyses of matters affecting

22 the interests of users of digital assets;

23 (19) to take such actions as the Secretary deems

24 necessary to educate and protect users of digital assets;

25 (20) to develop and implement initiatives and programs

26 to promote responsible innovation in digital asset

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1 business activity; and

2 (21) to perform any other lawful acts necessary or

3 desirable to carry out the purposes and provisions of this

4 Act and other laws applicable to digital asset business

5 activity.

6 (d) The Department may share any information obtained

7 pursuant to this Act or any other law applicable to digital

8 asset business activity with law enforcement officials or

9 other regulatory agencies.

10 Section 1-20. Funds.

11 (a) All moneys collected or received by the Department

12 under this Act shall be deposited into the Consumer Protection

13 Fund, which is hereby created as a special fund in the State

14 treasury. The amounts deposited into the Consumer Protection

15 Fund shall be used for the ordinary and contingent expenses of

16 the Department in administering this Act and other financial

17 laws; nothing in this Act shall prevent the continuation of

18 the practice of paying expenses involving salaries,

19 retirement, social security, and State-paid insurance of State

20 officers and employees by appropriation from the General

21 Revenue Fund or any other fund. Moneys deposited into the

22 Consumer Protection Fund may be transferred to the Professions

23 Indirect Cost Fund or any other Department fund.

24 (b) The expenses of administering this Act, including

25 investigations and examinations provided for in this Act,

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1 shall be borne by and assessed against persons regulated by

2 this Act. The Department may establish fees by rule, including

3 in the following categories:

4 (1) investigation of registrants and registration

5 applicant fees;

6 (2) examination fees;

7 (3) contingent fees; and

8 (4) such other categories as may be required to

9 administer this Act.

10 (c) The Department shall charge and collect fees from

11 covered persons, which shall be nonrefundable unless otherwise

12 indicated, for the expenses of administering this Act as

13 follows:

14 (1) Each covered person shall pay $150 for each hour

15 or part of an hour for each examiner or staff assigned to

16 the supervision of the covered person plus actual travel

17 costs for any examination of digital asset business

18 activity pursuant to the Act.

19 (2) Each covered person shall pay to the Department

20 its pro rata share of the cost for administration of this

21 Act that exceeds other fees listed in this Act, as

22 estimated by the Department, for the current year and any

23 deficit actually incurred in the administration of the Act

24 in prior years. The total annual assessment for all

25 registrants shall initially be divided into a

26 transaction-based assessment and a custody-based

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1 assessment, each equal to approximately half the cost for

2 administration of this Act. Each registrant's pro rata

3 share of the transaction-based assessment shall be the

4 percentage that the total volume of digital asset

5 transactions conducted on behalf of residents by the

6 registrant bears to the total volume of digital asset

7 transactions by all registrants in Illinois. Each

8 registrant's pro rata share of the custody-based

9 assessment shall be the percentage that the total United

10 States dollar value of digital assets held in custody or

11 controlled by the registrant for residents bears to the

12 total United States dollar value held in custody or

13 controlled by all registrants in Illinois for residents.

14 (3) Beginning one year after the effective date of

15 this Act, the Department may, by rule, amend the fees set

16 forth in this subsection in accordance with this Act. The

17 Department is authorized to consider setting fees for

18 digital asset business activity based on the value of

19 digital assets transacted by covered persons, volume of

20 digital assets transacted by covered persons, the value of

21 digital assets held in custody by covered person, and the

22 volume of digital assets held in custody by covered

23 persons.

24 Article 5. Customer Protections

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1 Section 5-5. Customer disclosures.

2 (a) When engaging in digital asset business activity with

3 a resident, a covered person shall provide to a resident the

4 customer disclosures required by subsection (b) and any

5 additional disclosures the Department by rule determines to be

6 necessary and appropriate for the protection of residents. The

7 Department may determine by rule the time and form required

8 for disclosures. A disclosure required by this Section shall

9 be made separately from any other information provided by the

10 covered person and in a clear and conspicuous manner in a

11 record the resident may keep.

12 (b) Before engaging in digital asset business activity

13 with a resident, a covered person shall disclose, to the

14 extent applicable to the digital asset business activity the

15 covered person will undertake with the resident, subject to

16 any rule or order issued by the Department, all of the

17 following:

18 (1) A schedule of fees and charges the covered person

19 may assess, the manner by which fees and charges will be

20 calculated if they are not set in advance and disclosed,

21 and the timing of the fees and charges.

22 (2) Whether the product or service provided by the

23 covered person is covered by either of the following:

24 (A) A form of insurance or other guarantee against

25 loss by an agency of the United States as follows:

26 (i) Up to the full United States dollar

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1 equivalent of digital assets placed under the

2 custody or control of, or purchased from, the

3 covered person as of the date of the placement or

4 purchase, including the maximum amount provided by

5 insurance under the Federal Deposit Insurance

6 Corporation or National Credit Union

7 Administration or otherwise available from the

8 Securities Investor Protection Corporation.

9 (ii) If not provided at the full United States

10 dollar equivalent of the digital assets placed

11 under the custody or control of or purchased from

12 the covered person, the maximum amount of coverage

13 for each resident expressed in the United States

14 dollar equivalent of the digital asset.

15 (iii) If not applicable to the product or

16 service provided by the covered person, a clear

17 and conspicuous statement that the product is not

18 insured, as applicable, by the Federal Deposit

19 Insurance Corporation, National Credit Union

20 Administration, or the Securities Investor

21 Protection Corporation.

22 (B)(i) Private insurance against loss or theft,

23 including cybertheft or theft by other means.

24 (ii) A covered person shall disclose the terms

25 of the insurance policy to the resident in a

26 manner that allows the resident to understand the

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1 specific insured risks that may result in partial

2 coverage of the resident's assets.

3 (3) The irrevocability of a transfer or exchange and

4 any exception to irrevocability.

5 (4) A description of all of the following:

6 (A) The covered person's liability for an

7 unauthorized, mistaken, or accidental transfer or

8 exchange.

9 (B) The resident's responsibility to provide

10 notice to the covered person of an unauthorized,

11 mistaken, or accidental transfer or exchange.

12 (C) The basis for any recovery by the resident

13 from the covered person in case of an unauthorized,

14 mistaken, or accidental transfer or exchange.

15 (D) General error resolution rights applicable to

16 an unauthorized, mistaken, or accidental transfer or

17 exchange.

18 (E) The method for the resident to update the

19 resident's contact information with the covered

20 person.

21 (5) That the date or time when the transfer or

22 exchange is made and the resident's account is debited may

23 differ from the date or time when the resident initiates

24 the instruction to make the transfer or exchange.

25 (6) Whether the resident has a right to stop a

26 preauthorized payment or revoke authorization for a

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1 transfer and the procedure to initiate a stop-payment

2 order or revoke authorization for a subsequent transfer.

3 (7) The resident's right to receive a receipt, trade

4 ticket, or other evidence of the transfer or exchange.

5 (8) The resident's right to at least 14 days' prior

6 notice of a change in the covered person's fee schedule,

7 other terms and conditions that have a material impact on

8 digital asset business activity with the resident, or the

9 policies applicable to the resident's account.

10 (9) That no digital asset is currently recognized as

11 legal tender by the State of Illinois or the United

12 States.

13 (10)(A) A list of instances in the past 12 months when

14 the covered person's service was unavailable to customers

15 seeking to engage in digital asset business activity due

16 to a service outage on the part of the covered person and

17 the causes of each identified service outage.

18 (B) As part of the disclosure required by this

19 paragraph, the covered person may list any steps the

20 covered person has taken to resolve underlying causes

21 for those outages.

22 (11) A disclosure, provided separately from the

23 disclosures provided pursuant to paragraphs (1) to (10) of

24 this subsection and written prominently in bold type, that

25 the State of Illinois has not approved or endorsed any

26 digital assets or determined if this customer disclosure

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1 is truthful or complete.

2 (c) Except as otherwise provided in subsection (d), at the

3 conclusion of a digital asset transaction with, or on behalf

4 of, a resident, a covered person shall provide the resident a

5 confirmation in a record which contains all of the following:

6 (1) The name and contact information of the covered

7 person, including the toll-free telephone number required

8 under Section 5-20.

9 (2) The type, value, date, precise time, and amount of

10 the transaction.

11 (3) The fee charged for the transaction, including any

12 charge for conversion of a digital asset to fiat currency

13 or other digital asset, as well as any indirect charges.

14 (d) If a covered person discloses that it will provide a

15 daily confirmation in the initial disclosure under subsection

16 (c), the covered person may elect to provide a single, daily

17 confirmation for all transactions with or on behalf of a

18 resident on that day instead of a per transaction

19 confirmation.

20 Section 5-10. Custody and protection of customer assets.

21 (a) A covered person that stores, holds, or maintains

22 custody or control of a digital asset for one or more persons

23 shall:

24 (1) at all times maintain an amount of each type of

25 digital asset sufficient to satisfy the aggregate

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1 entitlements of the persons to the type of digital asset;

2 (2) segregate such digital assets from the other

3 assets of the covered person; and

4 (3) not sell, transfer, assign, lend, hypothecate,

5 pledge, or otherwise use or encumber such digital assets,

6 except for the sale, transfer, or assignment of such

7 digital assets at the direction of such other persons.

8 (b) If a covered person violates subsection (a), then the

9 property interests of the persons in the digital asset are pro

10 rata property interests in the type of digital asset to which

11 the persons are entitled without regard to the time the

12 persons became entitled to the digital asset or the covered

13 person obtained control of the digital asset.

14 (c) A digital asset subject to this Section is:

15 (1) held for the persons entitled to the digital asset

16 under subsection (a);

17 (2) not the property of the covered person; and

18 (3) not subject to the claims of creditors of the

19 covered person.

20 (d) Digital assets subject to this Section, even if

21 commingled with other assets of the covered person, are held

22 in trust for the benefit of the persons entitled to the digital

23 assets under subsection (a), in the event of insolvency, the

24 filing of a petition by or against the covered person under the

25 United States Bankruptcy Code (11 U.S.C. 101 et seq.) for

26 bankruptcy or reorganization, the filing of a petition by or

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1 against the covered person for receivership, the commencement

2 of any other judicial or administrative proceeding for its

3 dissolution or reorganization, or an action by a creditor

4 against the covered person who is not a beneficiary of this

5 statutory trust. No digital asset impressed with a trust

6 pursuant to this subsection shall be subject to attachment,

7 levy of execution, or sequestration by order of any court,

8 except for a beneficiary of this statutory trust.

9 (e) The Department may adopt rules applicable to covered

10 persons related to additional protections of customer assets,

11 including, but not limited to:

12 (1) rules requiring that digital assets and funds

13 controlled by the covered person on behalf of residents be

14 held in accounts segregated from the covered person's own

15 digital assets and funds;

16 (2) rules related to qualified custodians that may

17 hold such segregated accounts;

18 (3) rules related to titling of such segregated

19 accounts;

20 (4) rules related to audit requirements for customer

21 assets;

22 (5) rules requiring compliance with specific

23 provisions of the Uniform Commercial Code applicable to

24 digital assets;

25 (6) rules restricting selling, transferring,

26 assigning, lending, hypothecating, pledging, or otherwise

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1 using or encumbering customer assets; and

2 (7) any rules as may be as may be necessary and

3 appropriate for the protection of residents or necessary

4 to effectuate the purposes of this Section.

5 Section 5-15. Covered exchanges.

6 (a)(1) Except as provided for under paragraph (2) of this

7 subsection, a covered exchange, before listing or offering a

8 digital asset that the covered exchange can exchange on behalf

9 of a resident, shall certify on a form provided by the

10 Department that the covered exchange has done the following:

11 (A) Identified the risk that the digital asset would

12 be deemed a security by federal or state regulators.

13 (B) Provided, in writing, full and fair disclosure of

14 all material facts relating to conflicts of interest that

15 are associated with the covered exchange and the digital

16 asset.

17 (C) Conducted a comprehensive risk assessment designed

18 to ensure consumers are adequately protected from

19 cybersecurity risk, risk of malfeasance, including theft,

20 risks related to code or protocol defects, market-related

21 risks, including price manipulation and fraud, and any

22 other material risks.

23 (D) Established policies and procedures to reevaluate

24 the appropriateness of the continued listing or offering

25 of the digital asset, including an evaluation of whether

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1 material changes have occurred.

2 (E) Established policies and procedures to cease

3 listing or offering the digital asset, including

4 notification to affected consumers and counterparties.

5 (F) Any other requirement designated by rule by the

6 Department as may be necessary and appropriate for the

7 protection of residents.

8 (2) Certification by a covered exchange shall not be

9 required for any digital asset approved for listing on or

10 before the effective date of this Act by the New York

11 Department of Financial Services pursuant to Part 200 of Title

12 23 of the New York Code of Rules and Regulations, if the

13 covered exchange provides notification to the Department on a

14 form provided by the Department.

15 (3) After a finding that a covered exchange has listed or

16 offered a digital asset without appropriate certification or

17 after a finding that misrepresentations were made in the

18 certification process, the Department may require the covered

19 exchange to cease listing or offering the digital asset and

20 may take an enforcement action under Section 20-50 of this

21 Act.

22 (b)(1) A covered exchange shall make every effort to

23 execute a resident's request to exchange a digital asset that

24 the covered exchange receives fully and promptly.

25 (2)(A) A covered exchange shall use reasonable diligence

26 to ensure that the outcome to the resident is as favorable as

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1 possible under prevailing market conditions. Compliance with

2 this paragraph shall be determined by factors, including, but

3 not limited to, all of the following:

4 (i) The character of the market for the digital asset,

5 including price and volatility.

6 (ii) The size and type of transaction.

7 (iii) The number of markets checked.

8 (iv) Accessibility of appropriate pricing.

9 (v) Any other factor designated by rule by the

10 Department as may be necessary and appropriate for the

11 protection of residents.

12 (B) At least once every 6 months, a covered exchange shall

13 review aggregated trading records of residents against

14 benchmarks to determine execution quality, investigate the

15 causes of any variance, and promptly take action to remedy

16 issues identified in that review.

17 (3) In a transaction for or with a resident, the covered

18 exchange shall not interject a third party between the covered

19 exchange and the best market for the digital asset in a manner

20 inconsistent with this subsection.

21 (4) If a covered exchange cannot execute directly with a

22 market and employs other means in order to ensure an execution

23 advantageous to the resident, the burden of showing the

24 acceptable circumstances for doing so is on the covered

25 exchange.

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1 Section 5-20. Customer service; requests for assistance.

2 (a) A covered person shall prominently display on its

3 internet website a toll-free telephone number through which a

4 resident can contact the covered person for requests for

5 assistance and receive live customer assistance, subject to

6 any rules adopted by the Department.

7 (b) A covered person shall implement reasonable policies

8 and procedures for accepting, processing, investigating, and

9 responding to requests for assistance in a timely and

10 effective manner. Such policies and procedures shall include

11 all of the following:

12 (1) A procedure for resolving disputes between the

13 covered person and a resident.

14 (2) A procedure for a resident to report an

15 unauthorized, mistaken, or accidental digital asset

16 business activity transaction.

17 (3) A procedure for a resident to file a complaint

18 with the covered person and for the resolution of the

19 complaint in a fair and timely manner with notice to the

20 resident as soon as reasonably practical of the resolution

21 and the reasons for the resolution.

22 (4) Any other procedure designated by rule by the

23 Department as may be necessary and appropriate for the

24 protection of residents.

25 Section 5-25. Collection of compensation. Unless exempt

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1 from registration under this Act, no person engaged in or

2 offering to engage in any act or service for which a

3 registration under this Act is required may bring or maintain

4 any action in any court to collect compensation for the

5 performance of the registrable services without alleging and

6 proving that he or she was the holder of a valid registration

7 under this Act at all times during the performance of those

8 services.

9 Article 10. Compliance

10 Section 10-5. General requirements.

11 (a) Each registrant is required to comply with the

12 provisions of this Act, any lawful order, rule, or regulation

13 made or issued under the provisions of this Act, and all

14 applicable federal and State laws, rules, and regulations.

15 (b) Each registrant shall designate a qualified individual

16 or individuals responsible for coordinating and monitoring

17 compliance with subsection (a).

18 (c) Each registrant shall maintain, implement, update, and

19 enforce written compliance policies and procedures, in

20 accordance with Section 10-10 and subject to any rules adopted

21 by the Department, which policies and procedures must be

22 reviewed and approved by the registrant's board of directors

23 or an equivalent governing body of the registrant.

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1 Section 10-10. Required policies and procedures.

2 (a) An applicant, before submitting an application, shall

3 create and a registrant, during registration, shall maintain,

4 implement, update, and enforce, written compliance policies

5 and procedures for all of the following:

6 (1) A cybersecurity program.

7 (2) A business continuity program.

8 (3) A disaster recovery program.

9 (4) An anti-fraud program.

10 (5) An anti-money laundering and countering the

11 financing of terrorism program.

12 (6) An operational security program.

13 (7)(A) A program designed to ensure compliance with

14 this Act and other laws of this State or federal laws that

15 are relevant to the digital asset business activity

16 contemplated by the registrant with or on behalf of

17 residents and to assist the registrant in achieving the

18 purposes of other State laws and federal laws if violation

19 of those laws has a remedy under this Act.

20 (B) At a minimum, the program described by this

21 paragraph shall specify the policies and procedures that

22 the registrant undertakes to minimize the risk that the

23 registrant facilitates the exchange of unregistered

24 securities.

25 (8) A conflict of interest program.

26 (9) A request for assistance program to comply with

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1 Section 5-20.

2 (10) Any other compliance program, policy, or

3 procedure the Department establishes by rule as necessary

4 for the protection of residents or for the safety and

5 soundness of the registrant's business or to effectuate

6 the purposes of this Act.

7 (b) A policy required by subsection (a) shall be

8 maintained in a record and designed to be adequate for a

9 registrant's contemplated digital asset business activity with

10 or on behalf of residents, considering the circumstances of

11 all participants and the safe operation of the activity. Any

12 policy and implementing procedure shall be compatible with

13 other policies and the procedures implementing them and not

14 conflict with policies or procedures applicable to the

15 registrant under other State law.

16 (c) A registrant's anti-fraud program shall include, at a

17 minimum, all of the following:

18 (1) Identification and assessment of the material

19 risks of its digital asset business activity related to

20 fraud, which shall include any form of market manipulation

21 and insider trading by the registrant, its employees, its

22 associated persons, or its customers.

23 (2) Protection against any material risk related to

24 fraud identified by the Department or the registrant.

25 (3) Periodic evaluation and revision of the anti-fraud

26 program, policies, and procedures.

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1 (d) A registrant's anti-money laundering and countering

2 the financing of terrorism program shall include, at a

3 minimum, all of the following:

4 (1) Identification and assessment of the material

5 risks of its digital asset business activity related to

6 money laundering and financing of terrorist activity.

7 (2) Procedures, in accordance with federal law or

8 guidance published by federal agencies responsible for

9 enforcing federal law, pertaining to money laundering and

10 financing of terrorist activity.

11 (3) Filing reports under the Bank Secrecy Act, 31

12 U.S.C. 5311 et seq., or Chapter X of Title 31 of the Code

13 of Federal Regulations and other federal or State law

14 pertaining to the prevention or detection of money

15 laundering or financing of terrorist activity.

16 (e) A registrant's operational security program shall

17 include, at a minimum, reasonable and appropriate

18 administrative, physical, and technical safeguards to protect

19 the confidentiality, integrity, and availability of any

20 nonpublic information or digital asset it receives, maintains,

21 or transmits.

22 (f)(1) A registrant's cybersecurity program shall include,

23 at a minimum, all of the following:

24 (A) Maintaining, updating, and enforcing policies and

25 procedures designed to protect the confidentiality,

26 integrity, and availability of the registrant's

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1 information systems and nonpublic information stored on

2 those information systems.

3 (B) Implementing and maintaining a written policy or

4 policies, approved at least annually by an executive

5 officer or the registrant's board of directors, or an

6 appropriate committee thereof, or equivalent governing

7 body, setting forth the registrant's policies and

8 procedures for the protection of its information systems

9 and nonpublic information stored on those information

10 systems.

11 (C) Designating a qualified individual responsible for

12 overseeing and implementing the registrant's cybersecurity

13 program and enforcing its cybersecurity policy. The

14 individual must have adequate authority to ensure

15 cybersecurity risks are appropriately managed, including

16 the ability to direct sufficient resources to implement

17 and maintain a cybersecurity program. The individual may

18 be employed by the registrant, one of its affiliates, or a

19 service provider.

20 (2) To assist in carrying out this subsection, the

21 Department may adopt rules to define terms used in this

22 subsection and to establish specific requirements for the

23 required cybersecurity program, including, but not limited to,

24 rules related to:

25 (A) penetration testing and vulnerability assessment;

26 (B) audit trails;

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1 (C) access privileges;

2 (D) application security;

3 (E) risk assessment;

4 (F) cybersecurity personnel and intelligence;

5 (G) affiliates and service providers;

6 (H) authentication;

7 (I) data retention;

8 (J) training and monitoring;

9 (K) encryption;

10 (L) incident response;

11 (M) notice of cybersecurity events; and

12 (N) any other requirement necessary and appropriate

13 for the protection of residents or for the safety and

14 soundness of the registrant or to effectuate the purposes

15 of this subsection.

16 (g) The Department may require a registrant to file with

17 the Department a copy of any report it makes to a federal or

18 state authority.

19 (h) After the policies and procedures required under this

20 Article are created and approved by the registrant, the

21 registrant shall engage a qualified individual or individuals

22 with adequate authority and experience to monitor and

23 implement each policy and procedure, publicize it as

24 appropriate, recommend changes as necessary, and enforce it.

25 Article 15. Registration

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1 Section 15-5. Registration required. A person shall not

2 engage in digital asset business activity, or hold itself out

3 as being able to engage in digital asset business activity,

4 with or on behalf of a resident unless the person is registered

5 in this State by the Department under this Article, or the

6 person is exempt from registration pursuant to Section 1-10.

7 Section 15-10. Application.

8 (a) An application for a registration under this Act shall

9 meet all of the following requirements:

10 (1) The application shall be in a form and medium

11 prescribed by the Department. The Department may require

12 the filing of the application through a multistate

13 licensing system.

14 (2) The application shall provide all of the following

15 information relevant to the applicant's proposed digital

16 asset business activity:

17 (A) The legal name of the applicant, any current

18 or proposed business United States Postal Service

19 address of the applicant, and any fictitious or trade

20 name the applicant uses or plans to use in conducting

21 the applicant's digital asset business activity with

22 or on behalf of a resident.

23 (B) The legal name, any former or fictitious name,

24 and the residential and business United States Postal

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1 Service address of any executive officer and

2 responsible individual of the applicant and any person

3 that has control of the applicant.

4 (C) A description of the current and former

5 business of the applicant and any affiliate of the

6 applicant for the 5 years before the application is

7 submitted, or, if the business has operated for less

8 than 5 years, for the time the business has operated,

9 including its products and services, associated

10 internet website addresses and social media pages,

11 principal place of business, projected user base, and

12 specific marketing targets.

13 (D) A list of all of the following:

14 (i) Any digital asset, money service, or money

15 transmitter registration the applicant and any

16 affiliates hold in another state or from an agency

17 of the United States.

18 (ii) The date the registrations described in

19 subdivision (i) expire.

20 (iii) Any revocation, suspension, or other

21 disciplinary action taken against the applicant

22 and any affiliates in any state or by an agency of

23 the United States and any applications rejected by

24 any state or agency of the United States.

25 (E) A list of any criminal conviction, deferred

26 prosecution agreement, and pending criminal proceeding

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1 in any jurisdiction against all of the following:

2 (i) The applicant.

3 (ii) Any executive officer of the applicant.

4 (iii) Any responsible individual of the

5 applicant.

6 (iv) Any person that has control over the

7 applicant.

8 (v) Any affiliate of the applicant.

9 (F) A list of any litigation, arbitration, or

10 administrative proceeding in any jurisdiction in which

11 the applicant or an executive officer, responsible

12 individual, or affiliate of the applicant has been a

13 party for the 10 years before the application is

14 submitted determined to be material in accordance with

15 generally accepted accounting principles and, to the

16 extent the applicant or such other person would be

17 required to disclose the litigation, arbitration, or

18 administrative proceeding in the applicant's or such

19 other person's audited financial statements, reports

20 to equity owners, and similar statements or reports.

21 (G) A list of any bankruptcy or receivership

22 proceeding in any jurisdiction for the 10 years before

23 the application is submitted in which any of the

24 following was a debtor:

25 (i) The applicant.

26 (ii) An executive officer of the applicant.

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1 (iii) A responsible individual of the

2 applicant.

3 (iv) A person that has control over the

4 applicant.

5 (v) An affiliate of the applicant.

6 (H) The name and United States Postal Service

7 address of any bank or credit union in which the

8 applicant and any affiliates plan to deposit funds

9 obtained by digital asset business activity.

10 (I) The source of funds and credit to be used by

11 the applicant and any affiliate to conduct digital

12 asset business activity with or on behalf of a

13 resident.

14 (J) A current financial statement and other

15 documentation satisfactory to the Department

16 demonstrating that the applicant has the capital and

17 liquidity required by Section 20-5.

18 (K) The United States Postal Service address and

19 email address to which communications from the

20 Department can be sent.

21 (L) The name, United States Postal Service

22 address, and email address of the registered agent of

23 the applicant in this State.

24 (M) A copy of the certificate, or a detailed

25 summary acceptable to the Department, of coverage for

26 any liability, casualty, business interruption, or

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1 cybersecurity insurance policy maintained by the

2 applicant for itself, an executive officer, a

3 responsible individual, an affiliate, or the

4 applicant's users.

5 (N) If applicable, the date on which and the state

6 in which the applicant is formed and a copy of a

7 current certificate of good standing issued by that

8 state.

9 (O) If a person has control of the applicant and

10 the person's equity interests are publicly traded in

11 the United States, a copy of the audited financial

12 statement of the person for the most recent fiscal

13 year or most recent report of the person filed under

14 Section 13 of the Securities Exchange Act of 1934, 15

15 U.S.C. 78m.

16 (P) If a person has control of the applicant and

17 the person's equity interests are publicly traded

18 outside the United States, a copy of the audited

19 financial statement of the person for the most recent

20 fiscal year of the person or a copy of the most recent

21 documentation similar to that required in subparagraph

22 (O) filed with the foreign regulator in the domicile

23 of the person.

24 (Q) If the applicant is a partnership or a

25 member-managed limited liability company, the names

26 and United States Postal Service addresses of any

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1 general partner or member.

2 (R) If the applicant is required to register with

3 the Financial Crimes Enforcement Network of the United

4 States Department of the Treasury as a money service

5 business, evidence of the registration.

6 (S) A set of fingerprints for each executive

7 officer and responsible individual of the applicant.

8 (T) If available, for any executive officer and

9 responsible individual of the applicant, for the 10

10 years before the application is submitted, employment

11 history and history of any investigation of the

12 individual or legal proceeding to which the individual

13 was a party.

14 (U) The plans through which the applicant will

15 meet its obligations under Article 10.

16 (V) Any other information the Department requires

17 by rule.

18 (3) The application shall be accompanied by a

19 nonrefundable fee of $5,000 or the amount determined by

20 the Department to cover the costs of application review,

21 whichever is greater.

22 (b)(1) On receipt of a completed application, the

23 Department shall investigate all of the following:

24 (A) The financial condition and responsibility of the

25 applicant and any affiliate of the applicant.

26 (B) The relevant financial and business experience,

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1 character, and general fitness of the applicant and any

2 affiliate of the applicant.

3 (C) The competence, experience, character, and general

4 fitness of each executive officer and director, each

5 responsible individual, and any person that has control of

6 the applicant.

7 (2) On receipt of a completed application, the Department

8 may investigate the business premises of an applicant or an

9 affiliate of the applicant or require the submission of any

10 other documents or information the Department deems relevant

11 to the application.

12 (3) The investigation required by this subsection must

13 allow the Secretary to issue positive findings stating that

14 the financial condition, financial responsibility, competence,

15 experience, character, and general fitness of the applicant,

16 each executive officer and director, each responsible

17 individual, any person that has control of the applicant, and

18 any affiliate of the applicant are such as to command the

19 confidence of the community and to warrant belief that the

20 business will be operated honestly, fairly, and efficiently

21 within the purpose of this Act; if the Secretary does not so

22 find, he or she shall not issue the registration, and he or she

23 shall notify the applicant of the denial.

24 (c)(1) After completing the investigation required by

25 subsection (b), the Department shall send the applicant notice

26 of its decision to approve, conditionally approve, or deny the

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1 application. If the Department does not receive notice from

2 the applicant that the applicant accepts conditions specified

3 by the Department within 31 days following the Department's

4 notice of the conditions, the application shall be deemed

5 withdrawn.

6 (2) The Secretary may impose conditions on a registration

7 if the Secretary determines that those conditions are

8 necessary or appropriate. These conditions shall be imposed in

9 writing and shall continue in effect for the period prescribed

10 by the Secretary.

11 (d) A registration issued pursuant to this Act shall take

12 effect on the later of the following:

13 (1) The date the Department issues the registration.

14 (2) The date the registration provides the security

15 required by Section 20-5.

16 (e) In addition to the fee required by paragraph (3) of

17 subsection (a), an applicant shall pay the costs of the

18 Department's investigation under subsection (b).

19 (f) A registration issued pursuant to this Act shall

20 remain in full force and effect until it expires without

21 renewal, is surrendered by the registration, or revoked or

22 suspended as hereinafter provided.

23 (g)(1) The Department may issue a conditional registration

24 to an applicant who holds or maintains a registration to

25 conduct virtual currency business activity in the State of New

26 York pursuant to Part 200 of Title 23 of the New York Code of

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1 Rules and Regulations, or a charter as a New York State limited

2 purpose trust company with approval to conduct virtual

3 currency business under the New York Banking Law, if the

4 registration or approval was issued no later than the

5 effective date of this Act and the applicant pays all

6 appropriate fees and complies with the requirements of this

7 Act.

8 (2) A conditional registration issued pursuant to this

9 subsection shall expire at the earliest of the following:

10 (A) upon issuance of an unconditional registration;

11 (B) upon denial of a registration;

12 (C) upon revocation of a registration issued pursuant

13 to Part 200 of Title 23 of the New York Code of Rules and

14 Regulations or disapproval or revocation of a charter as a

15 New York State limited purpose trust company with approval

16 to conduct virtual currency business under the New York

17 Banking Law.

18 Section 15-15. Renewal.

19 (a) Registrations shall be subject to renewal every year

20 using a common renewal period as established by the Department

21 by rule. A registrant may apply for renewal of the

22 registration by submitting a renewal application under

23 subsection (b) and paying all applicable fees due to the

24 Department.

25 (b) The renewal application required by subsection (a)

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1 shall be submitted in a form and medium prescribed by the

2 Department. The application shall contain all of the

3 following:

4 (1) Either a copy of the registrant's most recent

5 reviewed annual financial statement, if the gross revenue

6 generated by the registrant's digital asset business

7 activity in this State was not more than $2,000,000 for

8 the fiscal year ending before the anniversary date of

9 issuance of its registration under this Act, or a copy of

10 the registrant's most recent audited annual financial

11 statement, if the registrant's digital asset business

12 activity in this State amounted to more than $2,000,000,

13 for the fiscal year ending before the anniversary date.

14 (2) If a person other than an individual has control

15 of the registrant, a copy of either of the following:

16 (A) The person's most recent reviewed annual

17 financial statement, if the person's gross revenue was

18 not more than $2,000,000 in the previous fiscal year

19 measured as of the anniversary date of issuance of its

20 registration under this Act.

21 (B) The person's most recent audited consolidated

22 annual financial statement, if the person's gross

23 revenue was more than $2,000,000 in the previous

24 fiscal year measured as of the anniversary date of

25 issuance of its registration under this Act.

26 (3) A description of any of the following:

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1 (A) Any material change in the financial condition

2 of the registrant and any affiliate of the registrant.

3 (B) Any material litigation related to the

4 registrant's digital asset business activity and

5 involving the registrant or an executive officer,

6 responsible individual, or affiliate of the

7 registrant.

8 (C) Any federal, state, or foreign investigation

9 involving the registrant or an executive officer,

10 responsible individual, or affiliate of the

11 registrant.

12 (D)(i) Any data security breach or cybersecurity

13 event involving the registrant.

14 (ii) A description of a data security breach

15 pursuant to this subparagraph does not constitute

16 disclosure or notification of a security breach

17 for purposes of any other law.

18 (4) Information or records required by Section 20-25

19 that the registrant has not reported to the Department.

20 (5) The number of digital asset business activity

21 transactions with or on behalf of residents for the period

22 since the later of the date the registration was issued or

23 the date the last renewal application was submitted.

24 (6)(A) The amount of United States dollar equivalent

25 of digital assets in the custody or control of the

26 registrant at the end of the last month that ends not later

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1 than 30 days before the date of the renewal application.

2 (B) The total number of residents for whom the

3 registrant had custody or control of United States

4 dollar equivalent of digital assets on that date.

5 (7) Evidence that the registrant is in compliance with

6 Section 5-10.

7 (8) Evidence that the registrant is in compliance with

8 Section 20-5.

9 (9) A list of all locations where the registrant

10 engages in digital asset business activity.

11 (10) Any other information the Department requires by

12 rule.

13 (c) If a registrant does not timely comply with this

14 Section, the Department may take enforcement actions provided

15 under Section 20-50. Notice or hearing is not required for a

16 suspension or revocation of a registration under this Act for

17 failure to pay a renewal fee, file a renewal application, or

18 otherwise comply with this Section.

19 (d) Suspension or revocation of a registration under this

20 Section does not invalidate a transfer or exchange of digital

21 assets for or on behalf of a resident made during the

22 suspension or revocation and does not insulate the registrant

23 from liability under this Act.

24 (e) For good cause, the Department, in its sole

25 discretion, may extend a period under this Section.

26 (f) A registrant that does not comply with this Section

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1 shall cease digital asset business activities with or on

2 behalf of a resident. A registrant ceasing an activity or

3 activities regulated by this Act and desiring to no longer be

4 registered shall so inform the Department in writing and, at

5 the same time, convey any registration issued and all other

6 symbols or indicia of registration. The registrant shall

7 include a plan for the withdrawal from regulated business,

8 including a timetable for the disposition of the business, and

9 comply with the surrender guidelines or requirements of the

10 Department.

11 Section 15-20. Nontransferable registration. A

12 registration under this Act is not transferable or assignable.

13 Article 20. Supervision

14 Section 20-5. Surety bond; capital and liquidity

15 requirements.

16 (a)(1)(A) A registrant shall maintain a surety bond or

17 trust account in United States dollars in a form and amount as

18 determined by the Department for the protection of residents

19 that engage in digital asset business activity with the

20 registrant.

21 (B) If a registrant maintains a trust account

22 pursuant to this Section, that trust account shall be

23 maintained with a qualified custodian.

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1 (2) Security deposited under this Section shall be for

2 the benefit of a claim against the registrant on account

3 of the registrant's digital asset business activity with

4 or on behalf of a resident.

5 (3) Security deposited under this Section shall cover

6 claims for the period the Department specifies by rule and

7 for an additional period the Department specifies after

8 the registrant ceases to engage in digital asset business

9 activity with or on behalf of a resident.

10 (4) The Department may require the registrant to

11 increase the amount of security deposited under this

12 Section, and the registrant shall deposit the additional

13 security not later than 15 days after the registrant

14 receives notice in a record of the required increase.

15 (5) The Department may permit a registrant to

16 substitute or deposit an alternate form of security

17 satisfactory to the Department if the registrant at all

18 times complies with this Section.

19 (b) In addition to the security required under subsection

20 (a), a registrant shall maintain at all times capital and

21 liquidity, each in an amount and form as the Department

22 determines is sufficient to ensure the financial integrity of

23 the registrant and its ongoing operations based on an

24 assessment of the specific risks applicable to the registrant.

25 In determining the minimum amount of capital and liquidity

26 that shall be maintained by a registrant, the Department may

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1 consider factors, including, but not limited to, all of the

2 following:

3 (1) The composition of the registrant's total assets,

4 including the position, size, quality, liquidity, risk

5 exposure, and price volatility of each type of asset.

6 (2) The composition of the registrant's total

7 liabilities, including the size and repayment timing of

8 each type of liability.

9 (3) The actual and expected volume of the registrant's

10 digital asset business activity.

11 (4) The amount of leverage employed by the registrant.

12 (5) The liquidity position of the registrant.

13 (6) The financial protection that the registrant

14 provides pursuant to subsection (a).

15 (7) The types of entities to be serviced by the

16 registrant.

17 (8) The types of products or services to be offered by

18 the registrant.

19 (9) Arrangements adopted by the registrant for the

20 protection of its customers in the event of the

21 registrant's insolvency.

22 (c) A registrant shall hold liquidity required to be

23 maintained in accordance with this Section in the form of cash

24 or high-quality liquid assets, as defined by the Department

25 and in proportions determined by the Department.

26 (d) The Department may require a registrant to increase

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1 the capital or liquidity required under this Section. A

2 registrant shall submit evidence satisfactory to the

3 Department that it has additional capital or liquidity

4 required pursuant to this subsection not later than 15 days

5 after the registrant receives notice in a record of the

6 required increase.

7 Section 20-10. Examination.

8 (a)(1)(A) The Department may, at any time and from time to

9 time, examine the business and any office, within or outside

10 this State, of any covered person, or any agent of a covered

11 person, in order to ascertain (i) the financial condition of

12 the covered person, (ii) the safety and soundness of the

13 conduct of its business, (iii) the policies of its management,

14 (iv) whether the business is being conducted in a lawful

15 manner, (v) whether all digital asset business activity is

16 properly accounted for, and (vi) such other matters as the

17 Department may determine, including, but not limited to, any

18 activities of the covered person outside the State if in the

19 Department's judgment such activities may affect the covered

20 person's digital asset business activity.

21 (B) The directors, officers, and employees of a

22 covered person, or agent of a covered person, being

23 examined by the Department shall exhibit to the

24 Department, on request, any or all of the covered

25 person's accounts, books, correspondence, memoranda,

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1 papers, and other records and shall otherwise

2 facilitate the examination so far as it may be in their

3 power to do so.

4 (C) The covered person shall permit and assist the

5 Department to examine an affiliate or service provider

6 of the covered person when, in the Department's

7 judgment, it is necessary or advisable to do so.

8 (2) The Department may examine a covered person, its

9 affiliate, or service provider pursuant to this paragraph

10 without prior notice to the covered person, affiliate, or

11 service provider.

12 (b) A covered person shall pay the necessary costs of an

13 examination under this Section.

14 Section 20-15. Books and records.

15 (a) A registrant shall maintain, for all digital asset

16 business activity with or on behalf of a resident for 5 years

17 after the date of the activity, a record of all of the

18 following:

19 (1) Any transaction of the registrant with or on

20 behalf of the resident or for the registrant's account in

21 this State, including all of the following:

22 (A) The identity of the resident.

23 (B) The form of the transaction.

24 (C) The amount, date, and payment instructions

25 given by the resident.

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1 (D) The account number, name, and physical address

2 of:

3 (i) the parties to the transaction that are

4 customers or account holders of the registrant;

5 and

6 (ii) to the extent practicable, any other

7 parties to the transaction.

8 (2) The aggregate number of transactions and aggregate

9 value of transactions by the registrant with, or on behalf

10 of, the resident and for the registrant's account in this

11 State expressed in United States dollar equivalent of

12 digital assets for the previous 12 calendar months.

13 (3) Any transaction in which the registrant exchanged

14 one form of digital asset for fiat currency or another

15 form of digital asset with or on behalf of the resident.

16 (4) A general ledger maintained at least monthly that

17 lists all assets, liabilities, capital, income, and

18 expenses of the registrant.

19 (5) Any report of condition or other reports to the

20 Department, at such times and in such form, as the

21 Department may request.

22 (6) Bank statements and bank reconciliation records

23 for the registrant and the name, account number, and

24 United States Postal Service address of any bank or credit

25 union the registrant uses in the conduct of its digital

26 asset business activity with or on behalf of the resident.

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1 (7) A report of any dispute with a resident.

2 (b) A registrant shall maintain records required by

3 subsection (a) in a form that enables the Department to

4 determine whether the registrant is in compliance with this

5 Act, any court order, and the laws of this State.

6 (c) If a registrant maintains records outside this State

7 that pertain to transactions with or on behalf of a resident,

8 the registrant shall make the records available to the

9 Department not later than 3 days after request, or, on a

10 determination of good cause by the Department, in its sole

11 discretion, at a later time.

12 (d) All records maintained by a registrant, any affiliate,

13 or any service provider are subject to inspection by the

14 Department.

15 Section 20-20. Regulatory cooperation. The Department may

16 cooperate, coordinate, jointly examine, consult, and share

17 records and other information with the appropriate regulatory

18 agency of another state, a self-regulatory organization,

19 federal or state regulator of banking or non-depository

20 institutions, or a regulator of a jurisdiction outside the

21 United States, concerning the affairs and conduct of a covered

22 person, affiliate, or service provider in this State.

23 Section 20-25. Material business changes.

24 (a) A registrant shall file with the Department a report

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1 of the following, as may be applicable:

2 (1) A material change in information in the

3 application for a registration under this Act or the most

4 recent renewal report of the registrant under this Act.

5 (2) A material change in the registrant's business for

6 the conduct of its digital asset business activity with or

7 on behalf of a resident.

8 (3) A change of an affiliate, executive officer,

9 responsible individual, or person in control of the

10 registrant.

11 (b) A report required by this Section shall be filed not

12 later than 15 days after the change described in subsection

13 (a).

14 Section 20-30. Change in control.

15 (a) As used in this Section, "proposed person to be in

16 control" means the person that would control a registrant

17 after a proposed transaction that would result in a change in

18 control of the registrant.

19 (b) The following rules apply in determining whether a

20 person has control over a registrant:

21 (1) There is a rebuttable presumption of control if a

22 person directly or indirectly owns, controls, holds with

23 the power to vote, or holds proxies representing 10% or

24 more of the then outstanding voting securities issued by

25 the registrant.

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1 (2) A person has control over a registrant if the

2 person's voting power in the registrant constitutes or

3 will constitute at least 25% of the total voting power of

4 the registrant.

5 (3) There is a rebuttable presumption of control if

6 the person's voting power in another person constitutes or

7 will constitute at least 10% of the total voting power of

8 the other person and the other person's voting power in

9 the registrant constitutes at least 10% of the total

10 voting power of the registrant.

11 (4) There is no presumption of control solely because

12 an individual is an executive officer of the registrant.

13 (c) Before a proposed change in control of a registrant,

14 the proposed person to be in control shall submit to the

15 Department in a record all of the following:

16 (1) An application in a form and medium prescribed by

17 the Department.

18 (2) The information and records that Section 15-10

19 would require if the proposed person to be in control

20 already had control of the registrant.

21 (d) The Department shall not approve an application unless

22 the Secretary finds all of the following:

23 (1) The proposed person to be in control and all

24 executive officers of the proposed person to be in

25 control, if any, are of good character and sound financial

26 standing.

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1 (2) The proposed person to be in control is competent

2 to engage in digital asset business activity.

3 (3) It is reasonable to believe that, if the person

4 acquires control of the registrant, the proposed person to

5 be in control and the registrant will comply with all

6 applicable provisions of this Act and any rules or order

7 issued under this Act.

8 (4) Any plans by the proposed person to be in control

9 to change the business, corporate structure, or management

10 of the registrant are not detrimental to the safety and

11 soundness of the registrant.

12 (e) The Department, in accordance with Section 15-10,

13 shall approve, approve with conditions, or deny an application

14 for a change in control of a registrant. The Department, in a

15 record, shall send notice of its decision to the registrant

16 and the person that would be in control if the Department had

17 approved the change in control. If the Department denies the

18 application, the registrant shall abandon the proposed change

19 in control or cease digital asset business activity with or on

20 behalf of residents.

21 (f) If the Department applies a condition to approval of a

22 change in control of a registrant, and the Department does not

23 receive notice of the applicant's acceptance of the condition

24 specified by the Department not later than 31 days after the

25 Department sends notice of the condition, the application is

26 deemed denied. If the application is deemed denied, the

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1 registrant shall abandon the proposed change in control or

2 cease digital asset business activity with or on behalf of

3 residents.

4 (g) The Department may revoke or modify a determination

5 under subsection (d), after notice and opportunity to be

6 heard, if, in its judgment, revocation or modification is

7 consistent with this Act.

8 (h) If a change in control of a registrant requires

9 approval of another regulatory agency, and the action of the

10 other agency conflicts with that of the Department, the

11 Department shall confer with the other agency. If the proposed

12 change in control cannot be completed because the conflict

13 cannot be resolved, the registrant shall abandon the change in

14 control or cease digital asset business activity with or on

15 behalf of residents.

16 Section 20-35. Mergers.

17 (a) Before a proposed merger or consolidation of a

18 registrant with another person, the registrant shall submit

19 all of the following, as applicable, to the Department:

20 (1) An application in a form and medium prescribed by

21 the Department.

22 (2) The plan of merger or consolidation in accordance

23 with subsection (e).

24 (3) In the case of a registrant, the information

25 required by Section 15-10 concerning the person that would

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1 be the surviving entity in the proposed merger or

2 consolidation.

3 (b) If a proposed merger or consolidation would change the

4 control of a registrant, the registrant shall comply with

5 Section 20-30 and this Section.

6 (c) The Department, in accordance with Section 15-10,

7 shall approve, conditionally approve, or deny an application

8 for approval of a merger or consolidation of a registrant. The

9 Department, in a record, shall send notice of its decision to

10 the registrant and the person that would be the surviving

11 entity. If the Department denies the application, the

12 registrant shall abandon the merger or consolidation or cease

13 digital asset business activity with or on behalf of

14 residents.

15 (d) The Department may revoke or modify a determination

16 under paragraph (c), after notice and opportunity to be heard,

17 if, in its judgment, revocation or modification is consistent

18 with this Act.

19 (e) A plan of merger or consolidation of a registrant with

20 another person shall do all of the following:

21 (1) Describe the effect of the proposed transaction on

22 the registrant's conduct of digital asset business

23 activity with or on behalf of residents.

24 (2) Identify each person to be merged or consolidated

25 and the person that would be the surviving entity.

26 (3) Describe the terms and conditions of the merger or

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1 consolidation and the mode of carrying it into effect.

2 (f) If a merger or consolidation of a registrant and

3 another person requires approval of another regulatory agency,

4 and the action of the other agency conflicts with that of the

5 Department, the Department shall confer with the other agency.

6 If the proposed merger or consolidation cannot be completed

7 because the conflict cannot be resolved, the registrant shall

8 abandon the merger or consolidation or cease digital asset

9 business activity with or on behalf of residents.

10 (g) The Department may condition approval of an

11 application under subsection (a). If the Department does not

12 receive notice from the parties that the parties accept the

13 Department's condition not later than 31 days after the

14 Department sends notice in a record of the condition, the

15 application is deemed denied. If the application is deemed

16 denied, the registrant shall abandon the merger or

17 consolidation or cease digital asset business activity with,

18 or on behalf of, residents.

19 (h) If a registrant acquires substantially all of the

20 assets of a person, whether or not the person's registration

21 was approved by the Department, the transaction is subject to

22 this Section.

23 Section 20-40. Investigation of complaints. The Secretary

24 shall be authorized at all times to maintain staff and

25 facilities adequate to receive, record, and investigate

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1 complaints and inquiries made by any person concerning this

2 Act and any covered persons, affiliates, and service providers

3 under this Act. Each such person shall open their books,

4 records, documents, and offices wherever situated to the

5 Secretary or his or her appointees as needed to facilitate

6 such investigations.

7 Section 20-45. Additional investigation and examination

8 authority. In addition to any authority allowed under this Act

9 or other applicable law, the Secretary shall have the

10 authority to conduct investigations and examinations as

11 follows:

12 (1) For purposes of initial registration, renewal,

13 suspension, conditioning, revocation or termination, or

14 general or specific inquiry or investigation to determine

15 compliance with this Act, the Secretary shall have the

16 authority to access, receive, and use any books, accounts,

17 records, files, documents, information, or evidence,

18 including, but not limited to, the following:

19 (A) criminal, civil, and administrative history

20 information, including nonconviction data as specified

21 in the Criminal Code of 2012;

22 (B) personal history and experience information,

23 including independent credit reports obtained from a

24 consumer reporting agency described in Section 603(p)

25 of the federal Fair Credit Reporting Act; and

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1 (C) any other documents, information, or evidence

2 the Secretary deems relevant to the inquiry or

3 investigation, regardless of the location, possession,

4 control, or custody of the documents, information, or

5 evidence.

6 (2) For the purposes of investigating violations or

7 complaints arising under this Act or for the purposes of

8 examination, the Secretary may review, investigate, or

9 examine any covered person, affiliate, service provider,

10 individual, or person subject to this Act as often as

11 necessary in order to carry out the purposes of this Act.

12 The Secretary may direct, subpoena, or order the

13 attendance of and examine under oath all persons whose

14 testimony may be required about the transactions or the

15 business or subject matter of any such examination or

16 investigation, and may direct, subpoena, or order the

17 person to produce books, accounts, records, files, and any

18 other documents the Secretary deems relevant to the

19 inquiry.

20 (3) Each covered person, affiliate, service provider,

21 individual, or person subject to this Act shall make

22 available to the Secretary upon request the books and

23 records relating to the operations of the registrant,

24 affiliate, individual, or person subject to this Act. The

25 Secretary shall have access to those books and records and

26 interview the officers, principals, employees, independent

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1 contractors, agents, and customers of the covered person,

2 affiliate, service provider, individual, or person subject

3 to this Act concerning their business.

4 (4) Each covered person, affiliate, service provider,

5 individual, or person subject to this Act shall make or

6 compile reports or prepare other information as directed

7 by the Secretary in order to carry out the purposes of this

8 Section, including, but not limited to:

9 (A) accounting compilations;

10 (B) information lists and data concerning

11 transactions in a format prescribed by the Secretary;

12 or

13 (C) other information deemed necessary to carry

14 out the purposes of this Section.

15 (5) In making any examination or investigation

16 authorized by this Act, the Secretary may control access

17 to any documents and records of the covered person or

18 person under examination or investigation. The Secretary

19 may take possession of the documents and records or place

20 a person in exclusive charge of the documents and records

21 in the place where they are usually kept. During the

22 period of control, no person shall remove or attempt to

23 remove any of the documents or records, except pursuant to

24 a court order or with the consent of the Secretary. Unless

25 the Secretary has reasonable grounds to believe the

26 documents or records of the covered person or person under

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1 examination or investigation have been or are at risk of

2 being altered or destroyed for purposes of concealing a

3 violation of this Act, the covered person or owner of the

4 documents and records shall have access to the documents

5 or records as necessary to conduct its ordinary business

6 affairs.

7 (6) In order to carry out the purposes of this

8 Section, the Secretary may:

9 (A) retain attorneys, accountants, or other

10 professionals and specialists as examiners, auditors,

11 or investigators to conduct or assist in the conduct

12 of examinations or investigations;

13 (B) enter into agreements or relationships with

14 other government officials, regulatory associations,

15 or self-regulatory organizations in order to improve

16 efficiencies and reduce regulatory burden by sharing

17 resources, standardized or uniform methods or

18 procedures, and documents, records, information, or

19 evidence obtained under this Section;

20 (C) use, hire, contract, or employ public or

21 privately available analytical systems, methods, or

22 software to examine or investigate the covered person,

23 affiliate, service provider, individual, or person

24 subject to this Act;

25 (D) accept and rely on examination or

26 investigation reports made by other government

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1 officials, within or outside this State; or

2 (E) accept audit reports made by an independent

3 certified public accountant for the covered person,

4 affiliate, service provider, individual, or person

5 subject to this Act in the course of that part of the

6 examination covering the same general subject matter

7 as the audit and may incorporate the audit report in

8 the report of the examination, report of

9 investigation, or other writing of the Secretary.

10 (7) The authority of this Section shall remain in

11 effect, whether such a covered person, affiliate, service

12 provider, individual, or person subject to this Act acts

13 or claims to act under any licensing or registration law

14 of this State or claims to act without the authority.

15 (8) No covered person, affiliate, service provider,

16 individual, or person subject to investigation or

17 examination under this Section may knowingly withhold,

18 abstract, remove, mutilate, destroy, or secrete any books,

19 records, computer records, or other information.

20 Section 20-50. Enforcement actions.

21 (a) As used in this Article, "enforcement action" means an

22 action including, but not limited to, all of the following:

23 (1) Suspending or revoking a registration under this

24 Act.

25 (2) Ordering a person to cease and desist from doing

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1 digital asset business activity with or on behalf of a

2 resident.

3 (3) Requesting the court to appoint a receiver for the

4 assets of a person doing digital asset business activity

5 with or on behalf of a resident.

6 (4) Requesting the court to issue temporary,

7 preliminary, or permanent injunctive relief against a

8 person doing digital asset business activity with or on

9 behalf of a resident.

10 (5) Assessing a civil penalty under Section 20-70.

11 (6) Recovering on the security under Section 20-5 and

12 initiating a plan to distribute the proceeds for the

13 benefit of a resident injured by a violation of this Act,

14 or law of this State other than this Act that applies to

15 digital asset business activity with or on behalf of a

16 resident.

17 (7) Imposing necessary or appropriate conditions on

18 the conduct of digital asset business activity with or on

19 behalf of a resident.

20 (8) Seeking restitution on behalf of a resident if the

21 Department shows economic injury due to a violation of

22 this Act.

23 (b) The Department may enter into a consent order with a

24 person regarding an enforcement action.

25 (c) This Section does not provide a private right of

26 action to a resident, provided this Section does not preclude

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1 an action by a resident to enforce rights under Article 5 or

2 subsection (a) of Section 20-5.

3 Section 20-55. Violations.

4 (a) The Department may take an enforcement action against

5 a covered person or any person otherwise subject to this Act in

6 any of the following instances:

7 (1) The covered person or person violates this Act, a

8 rule adopted or order issued under this Act, or a State or

9 federal law or regulation that applies to digital asset

10 business activity of the violator with or on behalf of a

11 resident.

12 (2) The covered person or person does not cooperate

13 with an examination or investigation by the Department,

14 fails to pay a fee, or fails to submit a report or

15 documentation.

16 (3) The covered person or person, in the conduct of

17 its digital asset business activity with or on behalf of a

18 resident, has engaged, is engaging, or is about to engage

19 in any of the following:

20 (A) An unsafe, unsound, or unlawful act or

21 practice.

22 (B) An unfair, deceptive, or abusive act or

23 practice.

24 (C) Fraud, misrepresentation, deceit, or

25 negligence.

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1 (D) Misappropriation of fiat currency, a digital

2 asset, or other value.

3 (4) An agency of the United States or another state

4 takes an action against the covered person or person that

5 would constitute an enforcement action if the Department

6 had taken the action.

7 (5) The covered person or person is convicted of a

8 crime related to its digital asset business activity with

9 or on behalf of a resident or involving fraud or felonious

10 activity that, as determined by the Department, makes the

11 covered person or person unsuitable to engage in digital

12 asset business activity.

13 (6) Any of the following occurs:

14 (A) The covered person or person becomes

15 insolvent.

16 (B) The covered person or person makes a general

17 assignment for the benefit of its creditors.

18 (C) The covered person or person becomes the

19 debtor, alleged debtor, respondent, or person in a

20 similar capacity in a case or other proceeding under

21 any bankruptcy, reorganization, arrangement,

22 readjustment, insolvency, receivership, dissolution,

23 liquidation, or similar law, and does not obtain from

24 the court, within a reasonable time, confirmation of a

25 plan or dismissal of the case or proceeding.

26 (D) The covered person or person applies for, or

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1 permits the appointment of, a receiver, trustee, or

2 other agent of a court for itself or for a substantial

3 part of its assets.

4 (7) The covered person or person makes a

5 misrepresentation to the Department.

6 (b) If the Secretary finds, as the result of examination,

7 investigation, or review of reports submitted by a registrant,

8 that the business and affairs of a registrant are not being

9 conducted in accordance with this Act, the Secretary may

10 notify the registrant of the correction necessary. If a

11 registrant fails to correct such violations, the Secretary may

12 issue an order requiring immediate correction and compliance

13 with this Act and may specify a reasonable date for

14 performance.

15 Section 20-60. Hearings.

16 (a) Except as provided in subsection (b), the Department

17 may take an enforcement action only after notice and

18 opportunity for a hearing as appropriate in the circumstances.

19 All hearings provided for in this Act shall be conducted in

20 accordance with Title 38, Part 100 of the Illinois

21 Administrative Code, and the Secretary shall have all the

22 powers granted therein.

23 (b)(1)(A) The Department may take an enforcement action,

24 other than the imposition of a civil penalty under Section

25 20-70, without notice if the circumstances require action

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1 before notice can be given.

2 (B) A person subject to an enforcement action

3 pursuant to this subsection shall have the right to an

4 expedited post-action hearing by the Department unless

5 the person has waived the hearing.

6 (2)(A) The Department may take an enforcement action,

7 other than the imposition of a civil penalty under Section

8 20-70, after notice and without a prior hearing if the

9 circumstances require action before a hearing can be held.

10 (B) A person subject to an enforcement action

11 pursuant to this subsection shall have the right to an

12 expedited post-action hearing by the Department unless

13 the person has waived the hearing.

14 (3) The Department may take an enforcement action

15 after notice and without a hearing if the person subject

16 to the enforcement action does not timely request a

17 hearing.

18 Section 20-65. Hearing rules.

19 (a) The Department may, in accordance with the Illinois

20 Administrative Procedure Act, adopt rules to provide for

21 review within the Department of the Secretary's decisions

22 affecting the rights of persons or entities under this Act.

23 The review shall provide for, at a minimum:

24 (1) appointment of a hearing officer;

25 (2) appropriate procedural rules, specific deadlines

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1 for filings, and standards of evidence and of proof; and

2 (3) provision for apportioning costs among parties to

3 the appeal.

4 (b) All final administrative decisions of the Department

5 under this Act, all amendments and modifications of final

6 administrative decisions, and any rules adopted by the

7 Department pursuant to this Act shall be subject to judicial

8 review pursuant to the provisions of the Administrative Review

9 Law.

10 Section 20-70. Civil penalties.

11 (a) If a person other than a registrant has engaged, is

12 engaging, or is about to engage in digital asset business

13 activity with or on behalf of a resident in violation of this

14 Act, the Department may assess a civil penalty against the

15 person in an amount not to exceed $100,000 for each day the

16 person is in violation of this Act.

17 (b) If a person violates a provision of this Act, the

18 Department may assess a civil penalty in an amount not to

19 exceed $25,000 for each day of violation or for each act or

20 omission in violation, except that a fine may be imposed not to

21 exceed $75,000 for each day of violation or for each act or

22 omission in violation related to fraud, misrepresentation,

23 deceit, or negligence.

24 (c) A civil penalty under this Section continues to accrue

25 until the date the violation ceases.

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1 (d) A civil penalty under this Section is cumulative to

2 any civil penalties enforceable by the Department under any

3 other law.

4 Section 20-75. Subpoena power.

5 (a) The Secretary shall have the power to issue and to

6 serve subpoenas and subpoenas duces tecum to compel the

7 attendance of witnesses and the production of all books,

8 accounts, records, and other documents and materials relevant

9 to an examination or investigation. The Secretary, or his or

10 her duly authorized representative, shall have power to

11 administer oaths and affirmations to any person.

12 (b) In the event of noncompliance with a subpoena or

13 subpoena duces tecum issued or caused to be issued by the

14 Secretary, the Secretary may, through the Attorney General or

15 the State's Attorney of the county in which the person

16 subpoenaed resides or has its principal place of business,

17 petition the circuit court of the county for an order

18 requiring the subpoenaed person to appear and testify and to

19 produce such books, accounts, records, and other documents as

20 are specified in the subpoena duces tecum. The court may grant

21 injunctive relief restraining the person from advertising,

22 promoting, soliciting, entering into, offering to enter into,

23 continuing, or completing any digital asset business activity.

24 The court may grant other relief, including, but not limited

25 to, the restraint, by injunction or appointment of a receiver,

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1 of any transfer, pledge, assignment, or other disposition of

2 the person's assets or any concealment, alteration,

3 destruction, or other disposition of books, accounts, records,

4 or other documents and materials as the court deems

5 appropriate, until the person has fully complied with the

6 subpoena or subpoena duces tecum and the Secretary has

7 completed an investigation or examination.

8 (c) If it appears to the Secretary that the compliance

9 with a subpoena or subpoena duces tecum issued or caused to be

10 issued by the Secretary pursuant to this Section is essential

11 to an investigation or examination, the Secretary, in addition

12 to the other remedies provided for in this Act, may, through

13 the Attorney General or the State's Attorney of the county in

14 which the subpoenaed person resides or has its principal place

15 of business, apply for relief to the circuit court of the

16 county. The court shall thereupon direct the issuance of an

17 order against the subpoenaed person requiring sufficient bond

18 conditioned on compliance with the subpoena or subpoena duces

19 tecum. The court shall cause to be endorsed on the order a

20 suitable amount of bond or payment pursuant to which the

21 person named in the order shall be freed, having a due regard

22 to the nature of the case.

23 (d) In addition, the Secretary may, through the Attorney

24 General or the State's Attorney of the applicable county, seek

25 a writ of attachment or an equivalent order from the circuit

26 court having jurisdiction over the person who has refused to

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1 obey a subpoena, who has refused to give testimony, or who has

2 refused to produce the matters described in the subpoena duces

3 tecum.

4 Section 20-80. Civil actions.

5 (a) The Department may bring a civil action in accordance

6 with the following:

7 (1) If a person violates any provision of this Act, a

8 rule or final order, or condition imposed in writing by

9 the Department, the Department through the Attorney

10 General or the State's Attorney of the county in which any

11 such violation occurs may bring an action in the circuit

12 court to enjoin the acts or practices or to enforce

13 compliance with this Act or any rule or order adopted

14 pursuant to this Act. Upon a proper showing, a permanent

15 or preliminary injunction, restraining order, or writ of

16 mandate shall be granted and a receiver, monitor,

17 conservator, or other designated fiduciary or officer of

18 the court may be appointed for the defendant or the

19 defendant's assets, or any other ancillary relief may be

20 granted as appropriate. A receiver, monitor, conservator,

21 or other designated fiduciary or officer of the court

22 appointed by the circuit court pursuant to this Section

23 may, with the approval of the court, exercise any or all of

24 the powers of the defendant's officers, directors,

25 partners, trustees, or persons who exercise similar powers

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1 and perform similar duties, including the filing of a

2 petition for bankruptcy. No action at law or in equity may

3 be maintained by any party against the Secretary, a

4 receiver, monitor, conservator, or other designated

5 fiduciary or officer of the court, by reason of their

6 exercising these powers or performing these duties

7 pursuant to the order of, or with the approval of, the

8 circuit court.

9 (2) The Secretary may include in any action relief

10 authorized by Section 20-50. The circuit court shall have

11 jurisdiction to award additional relief.

12 (3) In any action brought by the Department, the

13 Department may recover its costs and attorney's fees in

14 connection with prosecuting the action if the Department

15 is the prevailing party in the action.

16 (b) The Attorney General may enforce a violation of

17 Article 5 as an unlawful practice under the Consumer Fraud and

18 Deceptive Business Practices Act.

19 (c) A claim of violation of Article 5 may be asserted in a

20 civil action. Additionally, a prevailing resident may be

21 awarded reasonable attorney's fees and court costs.

22 Article 30. Additional Procedural Provisions

23 Section 30-5. Confidential supervisory information.

24 (a) Confidential supervisory information shall, unless

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1 made a matter of public record, not be subject to disclosure

2 under the Freedom of Information Act, and shall only be

3 subject to disclosure pursuant to subpoena or court order as

4 provided in subsection (e).

5 (b) All records of communications or summaries of

6 communications between employees, agents, or representatives

7 of the Department and employees, agents, or representatives of

8 other governmental agencies, a provider of any multistate

9 licensing system, or associations or organizations

10 representing federal, state, or local law enforcement or

11 regulatory agencies or providers of any multistate licensing

12 system, pursuant to any regulatory or supervision activity

13 under this Act (1) shall not be subject to disclosure under the

14 Freedom of Information Act, and (2) to the extent the records

15 contain confidential supervisory information, shall only be

16 subject to disclosure pursuant to subpoena or court order as

17 provided in subsection (e).

18 (c) All confidential supervisory information received from

19 other governmental agencies, a multistate licensing system

20 provider, or associations or organizations consisting of

21 employees, agents, or representatives of such agencies or

22 providers, shall not be subject to disclosure under the

23 Freedom of Information Act, and only subject to disclosure

24 pursuant to subpoena or court order as provided in subsection

25 (e).

26 (d) The sharing of any confidential supervisory

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1 information under this Act with governmental agencies,

2 providers of any multistate licensing system, or associations

3 or organizations consisting of employees, agents, or

4 representatives of such federal, state, or local law

5 enforcement or regulatory agencies, shall not result in the

6 loss of privilege arising under federal or state law, or the

7 loss of confidentiality protections provided by federal law or

8 state law, and are only subject to disclosure pursuant to

9 subpoena or court order as provided in subsection (e).

10 (e) Confidential supervisory information may not be

11 disclosed to anyone other than the regulated person, law

12 enforcement officials or other regulatory agencies that have

13 an appropriate regulatory interest as determined by the

14 Secretary, or to a party presenting a lawful subpoena, order,

15 or other judicial or administrative process to the Secretary.

16 The Secretary may immediately appeal to the court of

17 jurisdiction the disclosure of such confidential supervisory

18 information and seek a stay of the subpoena pending the

19 outcome of the appeal. Reports required of regulated persons

20 by the Secretary under this Act and results of examinations

21 performed by the Secretary under this Act shall be the

22 property of only the Secretary but may be shared with the

23 regulated person. Access under this Act to the books and

24 records of each regulated person shall be limited to the

25 Secretary and his agents as provided in this Act and to the

26 regulated person and its authorized agents and designees. No

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1 other person shall have access to the books and records of a

2 regulated person under this Act. Any person upon whom a demand

3 for production of confidential supervisory information is

4 made, whether by subpoena, order, or other judicial or

5 administrative process, must withhold production of the

6 confidential supervisory information and must notify the

7 Secretary of the demand, at which time the Secretary is

8 authorized to intervene for the purpose of enforcing the

9 limitations of this Section or seeking the withdrawal or

10 termination of the attempt to compel production of the

11 confidential supervisory information. The Secretary may impose

12 any conditions and limitations on the disclosure of

13 confidential supervisory information that are necessary to

14 protect the confidentiality of such information. Except as

15 authorized by the Secretary, no person obtaining access to

16 confidential supervisory information may make a copy of the

17 confidential supervisory information. The Secretary may

18 condition a decision to disclose confidential supervisory

19 information on entry of a protective order by the court or

20 administrative tribunal presiding in the particular case or on

21 a written agreement of confidentiality. In a case in which a

22 protective order or agreement has already been entered between

23 parties other than the Secretary, the Secretary may

24 nevertheless condition approval for release of confidential

25 supervisory information upon the inclusion of additional or

26 amended provisions in the protective order. The Secretary may

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1 authorize a party who obtained the records for use in one case

2 to provide them to another party in another case, subject to

3 any conditions that the Secretary may impose on either or both

4 parties. The requester shall promptly notify other parties to

5 a case of the release of confidential supervisory information

6 obtained and, upon entry of a protective order, shall provide

7 copies of confidential supervisory information to the other

8 parties.

9 (f) The Secretary is authorized to enter agreements or

10 sharing arrangements with other governmental agencies,

11 providers of any multistate licensing system, or associations

12 or organizations representing governmental agencies or

13 providers of any multistate licensing system. Notwithstanding

14 the foregoing, the provisions of this Section shall apply

15 regardless of the existence of any such agreement or sharing

16 arrangement.

17 (g) This Section in no way limits any right, privilege, or

18 authority that the Department has pursuant to any other

19 applicable law. This Section does not in any way limit any

20 privilege arising under federal or state law or other

21 exemption from disclosure pursuant to the Freedom of

22 Information Act.

23 (h) Notwithstanding the foregoing, whenever the Secretary

24 determines, in his or her sole discretion, that it is in the

25 public's interest, he or she may publicly disclose information

26 or documents obtained under this Act, unless otherwise

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1 prohibited by law.

2 Section 30-10. Additional rulemaking authority.

3 (a) In addition to such powers and rulemaking authority as

4 may be prescribed elsewhere in this Act or other financial

5 laws administered by the Department, the Department is hereby

6 authorized and empowered to adopt rules consistent with the

7 purposes of this Act, including, but not limited to:

8 (1) rules in connection with the activities of covered

9 persons, affiliates, and service providers as may be

10 necessary and appropriate for the protection of residents;

11 (2) rules to define the terms used in this Act and as

12 may be necessary and appropriate to interpret and

13 implement the provisions of this Act;

14 (3) rules as may be necessary for the administration

15 and enforcement of this Act;

16 (4) rules to set and collect fees necessary to

17 administer and enforce this Act;

18 (5) rules in connection with the activities of covered

19 persons, affiliates, and service providers as may be

20 necessary and appropriate for the safety and soundness of

21 such covered persons and affiliates and the stability of

22 the financial system in this State.

23 (b) The Secretary is hereby authorized and empowered to

24 make specific rulings, demands, and findings that he or she

25 deems necessary for the proper conduct of the registrants and

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1 affiliates thereof.

2 Article 35. Miscellaneous Provisions

3 Section 35-5. No evasion.

4 (a) It shall be unlawful to engage in any device,

5 subterfuge, or pretense to willfully evade or attempt to evade

6 the requirements of this Act or any rule or order issued by the

7 Department hereunder.

8 (b) Any financial product, service, or transaction that is

9 willfully structured to evade or attempt to evade the

10 definitions of digital asset or digital asset business

11 activity is a digital asset or digital asset business

12 activity, respectively, for purposes of this Act.

13 Section 35-10. Construction; severability.

14 (a) The provisions of this Act shall be liberally

15 construed to effectuate its purposes.

16 (b) The provisions of this Act are severable under Section

17 1.31 of the Statute on Statutes.

18 (c) To the extent that any provision of this Act is

19 preempted by federal law, the provision shall not apply and

20 shall not be enforced solely as to the extent of the preemption

21 and not as to other circumstances, persons, or applications.

22 Section 35-15. Transition period.

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1 (a) A covered person engaging in digital asset business

2 activity without a registration under this Act shall not be

3 considered in violation of Section 15-5 or 5-25 until July 1,

4 2027.

5 (b) A covered person engaging in digital asset business

6 activity shall not be considered in violation of Sections 5-5,

7 5-10, and 5-20 until January 1, 2027.

8 (c) A covered exchange shall not be considered in

9 violation of Section 5-15 until January 1, 2027.

10 (d) Notwithstanding the foregoing, the Department may

11 adopt rules pursuant to this Act upon this Act becoming law

12 with such rules not to take effect earlier than January 1,

13 2026.".

14 Article 90. Amendatory provisions

15 Section 90-5. The Freedom of Information Act is amended by

16 changing Section 7.5 as follows:

17 (5 ILCS 140/7.5)

18 Sec. 7.5. Statutory exemptions. To the extent provided for

19 by the statutes referenced below, the following shall be

20 exempt from inspection and copying:

21 (a) All information determined to be confidential

22 under Section 4002 of the Technology Advancement and

23 Development Act.

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1 (b) Library circulation and order records identifying

2 library users with specific materials under the Library

3 Records Confidentiality Act.

4 (c) Applications, related documents, and medical

5 records received by the Experimental Organ Transplantation

6 Procedures Board and any and all documents or other

7 records prepared by the Experimental Organ Transplantation

8 Procedures Board or its staff relating to applications it

9 has received.

10 (d) Information and records held by the Department of

11 Public Health and its authorized representatives relating

12 to known or suspected cases of sexually transmitted

13 infection or any information the disclosure of which is

14 restricted under the Illinois Sexually Transmitted

15 Infection Control Act.

16 (e) Information the disclosure of which is exempted

17 under Section 30 of the Radon Industry Licensing Act.

18 (f) Firm performance evaluations under Section 55 of

19 the Architectural, Engineering, and Land Surveying

20 Qualifications Based Selection Act.

21 (g) Information the disclosure of which is restricted

22 and exempted under Section 50 of the Illinois Prepaid

23 Tuition Act.

24 (h) Information the disclosure of which is exempted

25 under the State Officials and Employees Ethics Act, and

26 records of any lawfully created State or local inspector

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1 general's office that would be exempt if created or

2 obtained by an Executive Inspector General's office under

3 that Act.

4 (i) Information contained in a local emergency energy

5 plan submitted to a municipality in accordance with a

6 local emergency energy plan ordinance that is adopted

7 under Section 11-21.5-5 of the Illinois Municipal Code.

8 (j) Information and data concerning the distribution

9 of surcharge moneys collected and remitted by carriers

10 under the Emergency Telephone System Act.

11 (k) Law enforcement officer identification information

12 or driver identification information compiled by a law

13 enforcement agency or the Department of Transportation

14 under Section 11-212 of the Illinois Vehicle Code.

15 (l) Records and information provided to a residential

16 health care facility resident sexual assault and death

17 review team or the Executive Council under the Abuse

18 Prevention Review Team Act.

19 (m) Information provided to the predatory lending

20 database created pursuant to Article 3 of the Residential

21 Real Property Disclosure Act, except to the extent

22 authorized under that Article.

23 (n) Defense budgets and petitions for certification of

24 compensation and expenses for court appointed trial

25 counsel as provided under Sections 10 and 15 of the

26 Capital Crimes Litigation Act (repealed). This subsection

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1 (n) shall apply until the conclusion of the trial of the

2 case, even if the prosecution chooses not to pursue the

3 death penalty prior to trial or sentencing.

4 (o) Information that is prohibited from being

5 disclosed under Section 4 of the Illinois Health and

6 Hazardous Substances Registry Act.

7 (p) Security portions of system safety program plans,

8 investigation reports, surveys, schedules, lists, data, or

9 information compiled, collected, or prepared by or for the

10 Department of Transportation under Sections 2705-300 and

11 2705-616 of the Department of Transportation Law of the

12 Civil Administrative Code of Illinois, the Regional

13 Transportation Authority under Section 2.11 of the

14 Regional Transportation Authority Act, or the St. Clair

15 County Transit District under the Bi-State Transit Safety

16 Act (repealed).

17 (q) Information prohibited from being disclosed by the

18 Personnel Record Review Act.

19 (r) Information prohibited from being disclosed by the

20 Illinois School Student Records Act.

21 (s) Information the disclosure of which is restricted

22 under Section 5-108 of the Public Utilities Act.

23 (t) (Blank).

24 (u) Records and information provided to an independent

25 team of experts under the Developmental Disability and

26 Mental Health Safety Act (also known as Brian's Law).

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1 (v) Names and information of people who have applied

2 for or received Firearm Owner's Identification Cards under

3 the Firearm Owners Identification Card Act or applied for

4 or received a concealed carry license under the Firearm

5 Concealed Carry Act, unless otherwise authorized by the

6 Firearm Concealed Carry Act; and databases under the

7 Firearm Concealed Carry Act, records of the Concealed

8 Carry Licensing Review Board under the Firearm Concealed

9 Carry Act, and law enforcement agency objections under the

10 Firearm Concealed Carry Act.

11 (v-5) Records of the Firearm Owner's Identification

12 Card Review Board that are exempted from disclosure under

13 Section 10 of the Firearm Owners Identification Card Act.

14 (w) Personally identifiable information which is

15 exempted from disclosure under subsection (g) of Section

16 19.1 of the Toll Highway Act.

17 (x) Information which is exempted from disclosure

18 under Section 5-1014.3 of the Counties Code or Section

19 8-11-21 of the Illinois Municipal Code.

20 (y) Confidential information under the Adult

21 Protective Services Act and its predecessor enabling

22 statute, the Elder Abuse and Neglect Act, including

23 information about the identity and administrative finding

24 against any caregiver of a verified and substantiated

25 decision of abuse, neglect, or financial exploitation of

26 an eligible adult maintained in the Registry established

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1 under Section 7.5 of the Adult Protective Services Act.

2 (z) Records and information provided to a fatality

3 review team or the Illinois Fatality Review Team Advisory

4 Council under Section 15 of the Adult Protective Services

5 Act.

6 (aa) Information which is exempted from disclosure

7 under Section 2.37 of the Wildlife Code.

8 (bb) Information which is or was prohibited from

9 disclosure by the Juvenile Court Act of 1987.

10 (cc) Recordings made under the Law Enforcement

11 Officer-Worn Body Camera Act, except to the extent

12 authorized under that Act.

13 (dd) Information that is prohibited from being

14 disclosed under Section 45 of the Condominium and Common

15 Interest Community Ombudsperson Act.

16 (ee) Information that is exempted from disclosure

17 under Section 30.1 of the Pharmacy Practice Act.

18 (ff) Information that is exempted from disclosure

19 under the Revised Uniform Unclaimed Property Act.

20 (gg) Information that is prohibited from being

21 disclosed under Section 7-603.5 of the Illinois Vehicle

22 Code.

23 (hh) Records that are exempt from disclosure under

24 Section 1A-16.7 of the Election Code.

25 (ii) Information which is exempted from disclosure

26 under Section 2505-800 of the Department of Revenue Law of

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1 the Civil Administrative Code of Illinois.

2 (jj) Information and reports that are required to be

3 submitted to the Department of Labor by registering day

4 and temporary labor service agencies but are exempt from

5 disclosure under subsection (a-1) of Section 45 of the Day

6 and Temporary Labor Services Act.

7 (kk) Information prohibited from disclosure under the

8 Seizure and Forfeiture Reporting Act.

9 (ll) Information the disclosure of which is restricted

10 and exempted under Section 5-30.8 of the Illinois Public

11 Aid Code.

12 (mm) Records that are exempt from disclosure under

13 Section 4.2 of the Crime Victims Compensation Act.

14 (nn) Information that is exempt from disclosure under

15 Section 70 of the Higher Education Student Assistance Act.

16 (oo) Communications, notes, records, and reports

17 arising out of a peer support counseling session

18 prohibited from disclosure under the First Responders

19 Suicide Prevention Act.

20 (pp) Names and all identifying information relating to

21 an employee of an emergency services provider or law

22 enforcement agency under the First Responders Suicide

23 Prevention Act.

24 (qq) Information and records held by the Department of

25 Public Health and its authorized representatives collected

26 under the Reproductive Health Act.

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1 (rr) Information that is exempt from disclosure under

2 the Cannabis Regulation and Tax Act.

3 (ss) Data reported by an employer to the Department of

4 Human Rights pursuant to Section 2-108 of the Illinois

5 Human Rights Act.

6 (tt) Recordings made under the Children's Advocacy

7 Center Act, except to the extent authorized under that

8 Act.

9 (uu) Information that is exempt from disclosure under

10 Section 50 of the Sexual Assault Evidence Submission Act.

11 (vv) Information that is exempt from disclosure under

12 subsections (f) and (j) of Section 5-36 of the Illinois

13 Public Aid Code.

14 (ww) Information that is exempt from disclosure under

15 Section 16.8 of the State Treasurer Act.

16 (xx) Information that is exempt from disclosure or

17 information that shall not be made public under the

18 Illinois Insurance Code.

19 (yy) Information prohibited from being disclosed under

20 the Illinois Educational Labor Relations Act.

21 (zz) Information prohibited from being disclosed under

22 the Illinois Public Labor Relations Act.

23 (aaa) Information prohibited from being disclosed

24 under Section 1-167 of the Illinois Pension Code.

25 (bbb) Information that is prohibited from disclosure

26 by the Illinois Police Training Act and the Illinois State

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1 Police Act.

2 (ccc) Records exempt from disclosure under Section

3 2605-304 of the Illinois State Police Law of the Civil

4 Administrative Code of Illinois.

5 (ddd) Information prohibited from being disclosed

6 under Section 35 of the Address Confidentiality for

7 Victims of Domestic Violence, Sexual Assault, Human

8 Trafficking, or Stalking Act.

9 (eee) Information prohibited from being disclosed

10 under subsection (b) of Section 75 of the Domestic

11 Violence Fatality Review Act.

12 (fff) Images from cameras under the Expressway Camera

13 Act. This subsection (fff) is inoperative on and after

14 July 1, 2025.

15 (ggg) Information prohibited from disclosure under

16 paragraph (3) of subsection (a) of Section 14 of the Nurse

17 Agency Licensing Act.

18 (hhh) Information submitted to the Illinois State

19 Police in an affidavit or application for an assault

20 weapon endorsement, assault weapon attachment endorsement,

21 .50 caliber rifle endorsement, or .50 caliber cartridge

22 endorsement under the Firearm Owners Identification Card

23 Act.

24 (iii) Data exempt from disclosure under Section 50 of

25 the School Safety Drill Act.

26 (jjj) Information exempt from disclosure under Section

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1 30 of the Insurance Data Security Law.

2 (kkk) Confidential business information prohibited

3 from disclosure under Section 45 of the Paint Stewardship

4 Act.

5 (lll) Data exempt from disclosure under Section

6 2-3.196 of the School Code.

7 (mmm) Information prohibited from being disclosed

8 under subsection (e) of Section 1-129 of the Illinois

9 Power Agency Act.

10 (nnn) Materials received by the Department of Commerce

11 and Economic Opportunity that are confidential under the

12 Music and Musicians Tax Credit and Jobs Act.

13 (ooo) Data or information provided pursuant to Section

14 20 of the Statewide Recycling Needs and Assessment Act.

15 (ppp) Information that is exempt from disclosure under

16 Section 28-11 of the Lawful Health Care Activity Act.

17 (qqq) Information that is exempt from disclosure under

18 Section 7-101 of the Illinois Human Rights Act.

19 (rrr) Information prohibited from being disclosed

20 under Section 4-2 of the Uniform Money Transmission

21 Modernization Act.

22 (sss) Information exempt from disclosure under Section

23 40 of the Student-Athlete Endorsement Rights Act.

24 (ttt) Audio recordings made under Section 30 of the

25 Illinois State Police Act, except to the extent authorized

26 under that Section.

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1 (uuu) Information prohibited from being disclosed

2 under Section 30-5 of the Digital Assets Regulation Act.

3 (Source: P.A. 102-36, eff. 6-25-21; 102-237, eff. 1-1-22;

4 102-292, eff. 1-1-22; 102-520, eff. 8-20-21; 102-559, eff.

5 8-20-21; 102-813, eff. 5-13-22; 102-946, eff. 7-1-22;

6 102-1042, eff. 6-3-22; 102-1116, eff. 1-10-23; 103-8, eff.

7 6-7-23; 103-34, eff. 6-9-23; 103-142, eff. 1-1-24; 103-372,

8 eff. 1-1-24; 103-472, eff. 8-1-24; 103-508, eff. 8-4-23;

9 103-580, eff. 12-8-23; 103-592, eff. 6-7-24; 103-605, eff.

10 7-1-24; 103-636, eff. 7-1-24; 103-724, eff. 1-1-25; 103-786,

11 eff. 8-7-24; 103-859, eff. 8-9-24; 103-991, eff. 8-9-24;

12 103-1049, eff. 8-9-24; 103-1081, eff. 3-21-25.)

13 Section 90-10. The State Finance Act is amended by adding

14 Section 5.1030 as follows:

15 (30 ILCS 105/5.1030 new)

16 Sec. 5.1030. The Consumer Protection Fund.

17 Section 90-15. The Illinois Banking Act is amended by

18 changing Sections 2 and 30 as follows:

19 (205 ILCS 5/2) (from Ch. 17, par. 302)

20 Sec. 2. General definitions. In this Act, unless the

21 context otherwise requires, the following words and phrases

22 shall have the following meanings:

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1 "Accommodation party" shall have the meaning ascribed to

2 that term in Section 3-419 of the Uniform Commercial Code.

3 "Action" in the sense of a judicial proceeding includes

4 recoupments, counterclaims, set-off, and any other proceeding

5 in which rights are determined.

6 "Affiliate facility" of a bank means a main banking

7 premises or branch of another commonly owned bank. The main

8 banking premises or any branch of a bank may be an "affiliate

9 facility" with respect to one or more other commonly owned

10 banks.

11 "Appropriate federal banking agency" means the Federal

12 Deposit Insurance Corporation, the Federal Reserve Bank of

13 Chicago, or the Federal Reserve Bank of St. Louis, as

14 determined by federal law.

15 "Bank" means any person doing a banking business whether

16 subject to the laws of this or any other jurisdiction.

17 A "banking house", "branch", "branch bank", or "branch

18 office" shall mean any place of business of a bank at which

19 deposits are received, checks paid, or loans made, but shall

20 not include any place at which only records thereof are made,

21 posted, or kept. A place of business at which deposits are

22 received, checks paid, or loans made shall not be deemed to be

23 a branch, branch bank, or branch office if the place of

24 business is adjacent to and connected with the main banking

25 premises, or if it is separated from the main banking premises

26 by not more than an alley; provided always that (i) if the

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1 place of business is separated by an alley from the main

2 banking premises there is a connection between the two by

3 public or private way or by subterranean or overhead passage,

4 and (ii) if the place of business is in a building not wholly

5 occupied by the bank, the place of business shall not be within

6 any office or room in which any other business or service of

7 any kind or nature other than the business of the bank is

8 conducted or carried on. A place of business at which deposits

9 are received, checks paid, or loans made shall not be deemed to

10 be a branch, branch bank, or branch office (i) of any bank if

11 the place is a terminal established and maintained in

12 accordance with paragraph (17) of Section 5 of this Act, or

13 (ii) of a commonly owned bank by virtue of transactions

14 conducted at that place on behalf of the other commonly owned

15 bank under paragraph (23) of Section 5 of this Act if the place

16 is an affiliate facility with respect to the other bank.

17 "Branch of an out-of-state bank" means a branch

18 established or maintained in Illinois by an out-of-state bank

19 as a result of a merger between an Illinois bank and the

20 out-of-state bank that occurs on or after May 31, 1997, or any

21 branch established by the out-of-state bank following the

22 merger.

23 "Bylaws" means the bylaws of a bank that are adopted by the

24 bank's board of directors or shareholders for the regulation

25 and management of the bank's affairs. If the bank operates as a

26 limited liability company, however, "bylaws" means the

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1 operating agreement of the bank.

2 "Call report fee" means the fee to be paid to the

3 Commissioner by each State bank pursuant to paragraph (a) of

4 subsection (3) of Section 48 of this Act.

5 "Capital" includes the aggregate of outstanding capital

6 stock and preferred stock.

7 "Cash flow reserve account" means the account within the

8 books and records of the Commissioner of Banks and Real Estate

9 used to record funds designated to maintain a reasonable Bank

10 and Trust Company Fund operating balance to meet agency

11 obligations on a timely basis.

12 "Charter" includes the original charter and all amendments

13 thereto and articles of merger or consolidation.

14 "Commissioner" means the Commissioner of Banks and Real

15 Estate, except that beginning on April 6, 2009 (the effective

16 date of Public Act 95-1047), all references in this Act to the

17 Commissioner of Banks and Real Estate are deemed, in

18 appropriate contexts, to be references to the Secretary of

19 Financial and Professional Regulation.

20 "Commonly owned banks" means 2 or more banks that each

21 qualify as a bank subsidiary of the same bank holding company

22 pursuant to Section 18 of the Federal Deposit Insurance Act;

23 "commonly owned bank" refers to one of a group of commonly

24 owned banks but only with respect to one or more of the other

25 banks in the same group.

26 "Community" means a city, village, or incorporated town

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1 and also includes the area served by the banking offices of a

2 bank, but need not be limited or expanded to conform to the

3 geographic boundaries of units of local government.

4 "Company" means a corporation, limited liability company,

5 partnership, business trust, association, or similar

6 organization and, unless specifically excluded, includes a

7 "State bank" and a "bank".

8 "Consolidating bank" means a party to a consolidation.

9 "Consolidation" takes place when 2 or more banks, or a

10 trust company and a bank, are extinguished and by the same

11 process a new bank is created, taking over the assets and

12 assuming the liabilities of the banks or trust company passing

13 out of existence.

14 "Continuing bank" means a merging bank, the charter of

15 which becomes the charter of the resulting bank.

16 "Converting bank" means a State bank converting to become

17 a national bank, or a national bank converting to become a

18 State bank.

19 "Converting trust company" means a trust company

20 converting to become a State bank.

21 "Court" means a court of competent jurisdiction.

22 "Director" means a member of the board of directors of a

23 bank. In the case of a manager-managed limited liability

24 company, however, "director" means a manager of the bank and,

25 in the case of a member-managed limited liability company,

26 "director" means a member of the bank. The term "director"

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1 does not include an advisory director, honorary director,

2 director emeritus, or similar person, unless the person is

3 otherwise performing functions similar to those of a member of

4 the board of directors.

5 "Director of Banking" means the Director of the Division

6 of Banking of the Department of Financial and Professional

7 Regulation.

8 "Eligible depository institution" means an insured savings

9 association that is in default, an insured savings association

10 that is in danger of default, a State or national bank that is

11 in default or a State or national bank that is in danger of

12 default, as those terms are defined in this Section, or a new

13 bank as that term is defined in Section 11(m) of the Federal

14 Deposit Insurance Act or a bridge bank as that term is defined

15 in Section 11(n) of the Federal Deposit Insurance Act or a new

16 federal savings association authorized under Section

17 11(d)(2)(f) of the Federal Deposit Insurance Act.

18 "Fiduciary" means trustee, agent, executor, administrator,

19 committee, guardian for a minor or for a person under legal

20 disability, receiver, trustee in bankruptcy, assignee for

21 creditors, or any holder of similar position of trust.

22 "Financial institution" means a bank, savings bank,

23 savings and loan association, credit union, or any licensee

24 under the Consumer Installment Loan Act or the Sales Finance

25 Agency Act and, for purposes of Section 48.3, any proprietary

26 network, funds transfer corporation, or other entity providing

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1 electronic funds transfer services, or any corporate

2 fiduciary, its subsidiaries, affiliates, parent company, or

3 contractual service provider that is examined by the

4 Commissioner. For purposes of Section 5c and subsection (b) of

5 Section 13 of this Act, "financial institution" includes any

6 proprietary network, funds transfer corporation, or other

7 entity providing electronic funds transfer services, and any

8 corporate fiduciary.

9 "Foundation" means the Illinois Bank Examiners' Education

10 Foundation.

11 "General obligation" means a bond, note, debenture,

12 security, or other instrument evidencing an obligation of the

13 government entity that is the issuer that is supported by the

14 full available resources of the issuer, the principal and

15 interest of which is payable in whole or in part by taxation.

16 "Guarantee" means an undertaking or promise to answer for

17 payment of another's debt or performance of another's duty,

18 liability, or obligation whether "payment guaranteed" or

19 "collection guaranteed".

20 "In danger of default" means a State or national bank, a

21 federally chartered insured savings association, or an

22 Illinois state chartered insured savings association with

23 respect to which the Commissioner or the appropriate federal

24 banking agency has advised the Federal Deposit Insurance

25 Corporation that:

26 (1) in the opinion of the Commissioner or the

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1 appropriate federal banking agency,

2 (A) the State or national bank or insured savings

3 association is not likely to be able to meet the

4 demands of the State or national bank's or savings

5 association's obligations in the normal course of

6 business; and

7 (B) there is no reasonable prospect that the State

8 or national bank or insured savings association will

9 be able to meet those demands or pay those obligations

10 without federal assistance; or

11 (2) in the opinion of the Commissioner or the

12 appropriate federal banking agency,

13 (A) the State or national bank or insured savings

14 association has incurred or is likely to incur losses

15 that will deplete all or substantially all of its

16 capital; and

17 (B) there is no reasonable prospect that the

18 capital of the State or national bank or insured

19 savings association will be replenished without

20 federal assistance.

21 "In default" means, with respect to a State or national

22 bank or an insured savings association, any adjudication or

23 other official determination by any court of competent

24 jurisdiction, the Commissioner, the appropriate federal

25 banking agency, or other public authority pursuant to which a

26 conservator, receiver, or other legal custodian is appointed

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1 for a State or national bank or an insured savings

2 association.

3 "Insured savings association" means any federal savings

4 association chartered under Section 5 of the federal Home

5 Owners' Loan Act and any State savings association chartered

6 under the Illinois Savings and Loan Act of 1985 or a

7 predecessor Illinois statute, the deposits of which are

8 insured by the Federal Deposit Insurance Corporation. The term

9 also includes a savings bank organized or operating under the

10 Savings Bank Act.

11 "Insured savings association in recovery" means an insured

12 savings association that is not an eligible depository

13 institution and that does not meet the minimum capital

14 requirements applicable with respect to the insured savings

15 association.

16 "Issuer" means for purposes of Section 33 every person who

17 shall have issued or proposed to issue any security; except

18 that (1) with respect to certificates of deposit, voting trust

19 certificates, collateral-trust certificates, and certificates

20 of interest or shares in an unincorporated investment trust

21 not having a board of directors (or persons performing similar

22 functions), "issuer" means the person or persons performing

23 the acts and assuming the duties of depositor or manager

24 pursuant to the provisions of the trust, agreement, or

25 instrument under which the securities are issued; (2) with

26 respect to trusts other than those specified in clause (1)

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1 above, where the trustee is a corporation authorized to accept

2 and execute trusts, "issuer" means the entrusters, depositors,

3 or creators of the trust and any manager or committee charged

4 with the general direction of the affairs of the trust

5 pursuant to the provisions of the agreement or instrument

6 creating the trust; and (3) with respect to equipment trust

7 certificates or like securities, "issuer" means the person to

8 whom the equipment or property is or is to be leased or

9 conditionally sold.

10 "Letter of credit" and "customer" shall have the meanings

11 ascribed to those terms in Section 5-102 of the Uniform

12 Commercial Code.

13 "Main banking premises" means the location that is

14 designated in a bank's charter as its main office.

15 "Maker or obligor" means for purposes of Section 33 the

16 issuer of a security, the promisor in a debenture or other debt

17 security, or the mortgagor or grantor of a trust deed or

18 similar conveyance of a security interest in real or personal

19 property.

20 "Merged bank" means a merging bank that is not the

21 continuing, resulting, or surviving bank in a consolidation or

22 merger.

23 "Merger" includes consolidation.

24 "Merging bank" means a party to a bank merger.

25 "Merging trust company" means a trust company party to a

26 merger with a State bank.

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1 "Mid-tier bank holding company" means a corporation that

2 (a) owns 100% of the issued and outstanding shares of each

3 class of stock of a State bank, (b) has no other subsidiaries,

4 and (c) 100% of the issued and outstanding shares of the

5 corporation are owned by a parent bank holding company.

6 "Municipality" means any municipality, political

7 subdivision, school district, taxing district, or agency.

8 "National bank" means a national banking association

9 located in this State and after May 31, 1997, means a national

10 banking association without regard to its location.

11 "Out-of-state bank" means a bank chartered under the laws

12 of a state other than Illinois, a territory of the United

13 States, or the District of Columbia.

14 "Parent bank holding company" means a corporation that is

15 a bank holding company as that term is defined in the Illinois

16 Bank Holding Company Act of 1957 and owns 100% of the issued

17 and outstanding shares of a mid-tier bank holding company.

18 "Person" means an individual, corporation, limited

19 liability company, partnership, joint venture, trust, estate,

20 or unincorporated association.

21 "Public agency" means the State of Illinois, the various

22 counties, townships, cities, towns, villages, school

23 districts, educational service regions, special road

24 districts, public water supply districts, fire protection

25 districts, drainage districts, levee districts, sewer

26 districts, housing authorities, the Illinois Bank Examiners'

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1 Education Foundation, the Chicago Park District, and all other

2 political corporations or subdivisions of the State of

3 Illinois, whether now or hereafter created, whether herein

4 specifically mentioned or not, and shall also include any

5 other state or any political corporation or subdivision of

6 another state.

7 "Public funds" or "public money" means current operating

8 funds, special funds, interest and sinking funds, and funds of

9 any kind or character belonging to, in the custody of, or

10 subject to the control or regulation of the United States or a

11 public agency. "Public funds" or "public money" shall include

12 funds held by any of the officers, agents, or employees of the

13 United States or of a public agency in the course of their

14 official duties and, with respect to public money of the

15 United States, shall include Postal Savings funds.

16 "Published" means, unless the context requires otherwise,

17 the publishing of the notice or instrument referred to in some

18 newspaper of general circulation in the community in which the

19 bank is located at least once each week for 3 successive weeks.

20 Publishing shall be accomplished by, and at the expense of,

21 the bank required to publish. Where publishing is required,

22 the bank shall submit to the Commissioner that evidence of the

23 publication as the Commissioner shall deem appropriate.

24 "Qualified financial contract" means any security

25 contract, commodity contract, forward contract, including spot

26 and forward foreign exchange contracts, repurchase agreement,

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1 swap agreement, and any similar agreement, any option to enter

2 into any such agreement, including any combination of the

3 foregoing, and any master agreement for such agreements. A

4 master agreement, together with all supplements thereto, shall

5 be treated as one qualified financial contract. The contract,

6 option, agreement, or combination of contracts, options, or

7 agreements shall be reflected upon the books, accounts, or

8 records of the bank, or a party to the contract shall provide

9 documentary evidence of such agreement.

10 "Recorded" means the filing or recording of the notice or

11 instrument referred to in the office of the Recorder of the

12 county wherein the bank is located.

13 "Resulting bank" means the bank resulting from a merger or

14 conversion.

15 "Secretary" means the Secretary of Financial and

16 Professional Regulation, or a person authorized by the

17 Secretary or by this Act to act in the Secretary's stead.

18 "Securities" means stocks, bonds, debentures, notes, or

19 other similar obligations.

20 "Special purpose trust company" means a special purpose

21 trust company under Article IIA of the Corporate Fiduciary

22 Act.

23 "Stand-by letter of credit" means a letter of credit under

24 which drafts are payable upon the condition the customer has

25 defaulted in performance of a duty, liability, or obligation.

26 "State bank" means any banking corporation that has a

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1 banking charter issued by the Commissioner under this Act.

2 "State Banking Board" means the State Banking Board of

3 Illinois.

4 "Subsidiary" with respect to a specified company means a

5 company that is controlled by the specified company. For

6 purposes of paragraphs (8) and (12) of Section 5 of this Act,

7 "control" means the exercise of operational or managerial

8 control of a corporation by the bank, either alone or together

9 with other affiliates of the bank.

10 "Surplus" means the aggregate of (i) amounts paid in

11 excess of the par value of capital stock and preferred stock;

12 (ii) amounts contributed other than for capital stock and

13 preferred stock and allocated to the surplus account; and

14 (iii) amounts transferred from undivided profits.

15 "Tier 1 Capital" and "Tier 2 Capital" have the meanings

16 assigned to those terms in regulations promulgated for the

17 appropriate federal banking agency of a state bank, as those

18 regulations are now or hereafter amended.

19 "Trust company" means a limited liability company or

20 corporation incorporated in this State for the purpose of

21 accepting and executing trusts.

22 "Undivided profits" means undistributed earnings less

23 discretionary transfers to surplus.

24 "Unimpaired capital and unimpaired surplus", for the

25 purposes of paragraph (21) of Section 5 and Sections 32, 33,

26 34, 35.1, 35.2, and 47 of this Act means the sum of the state

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1 bank's Tier 1 Capital and Tier 2 Capital plus such other

2 shareholder equity as may be included by regulation of the

3 Commissioner. Unimpaired capital and unimpaired surplus shall

4 be calculated on the basis of the date of the last quarterly

5 call report filed with the Commissioner preceding the date of

6 the transaction for which the calculation is made, provided

7 that: (i) when a material event occurs after the date of the

8 last quarterly call report filed with the Commissioner that

9 reduces or increases the bank's unimpaired capital and

10 unimpaired surplus by 10% or more, then the unimpaired capital

11 and unimpaired surplus shall be calculated from the date of

12 the material event for a transaction conducted after the date

13 of the material event; and (ii) if the Commissioner determines

14 for safety and soundness reasons that a state bank should

15 calculate unimpaired capital and unimpaired surplus more

16 frequently than provided by this paragraph, the Commissioner

17 may by written notice direct the bank to calculate unimpaired

18 capital and unimpaired surplus at a more frequent interval. In

19 the case of a state bank newly chartered under Section 13 or a

20 state bank resulting from a merger, consolidation, or

21 conversion under Sections 21 through 26 for which no preceding

22 quarterly call report has been filed with the Commissioner,

23 unimpaired capital and unimpaired surplus shall be calculated

24 for the first calendar quarter on the basis of the effective

25 date of the charter, merger, consolidation, or conversion.

26 (Source: P.A. 95-924, eff. 8-26-08; 95-1047, eff. 4-6-09;

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1 96-1000, eff. 7-2-10; 96-1163, eff. 1-1-11; revised 8-6-24.)

2 (205 ILCS 5/30) (from Ch. 17, par. 337)

3 Sec. 30. Conversion; merger with trust company or special

4 purpose trust company. Upon approval by the Commissioner a

5 trust company having power so to do under the law under which

6 it is organized may convert into a state bank or may merge into

7 a state bank as prescribed by this Act; except that the action

8 by a trust company shall be taken in the manner prescribed by

9 and shall be subject to limitations and requirements imposed

10 by the law under which it is organized which law shall also

11 govern the rights of its dissenting stockholders. The rights

12 of dissenting stockholders of a state bank shall be governed

13 by Section 29 of this Act. The conversion or merger procedure

14 shall be:

15 (1) In the case of a merger, the board of directors of both

16 the merging trust company and the merging bank by a majority of

17 the entire board in each case shall approve a merger agreement

18 which shall contain:

19 (a) The name and location of the merging bank and of

20 the merging trust company and a list of the stockholders

21 of each as of the date of the merger agreement;

22 (b) With respect to the resulting bank (i) its name

23 and place of business; (ii) the amount of capital, surplus

24 and reserve for operating expenses; (iii) the classes and

25 the number of shares of stock and the par value of each

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1 share; (iv) the charter which is to be the charter of the

2 resulting bank, together with the amendments to the

3 continuing charter and to the continuing by-laws; and (v)

4 a detailed financial statement showing the assets and

5 liabilities after the proposed merger;

6 (c) Provisions governing the manner of converting the

7 shares of the merging bank and of the merging trust

8 company into shares of the resulting bank;

9 (d) A statement that the merger agreement is subject

10 to approval by the Commissioner and by the stockholders of

11 the merging bank and the merging trust company, and that

12 whether approved or disapproved, the parties thereto will

13 pay the Commissioner's expenses of examination;

14 (e) Provisions governing the manner of disposing of

15 the shares of the resulting bank not taken by the

16 dissenting stockholders of the merging trust company; and

17 (f) Such other provisions as the Commissioner may

18 reasonably require to enable him to discharge his duties

19 with respect to the merger.

20 (2) After approval by the board of directors of the

21 merging bank and of the merging trust company, the merger

22 agreement shall be submitted to the Commissioner for approval

23 together with the certified copies of the authorizing

24 resolution of each board of directors showing approval by a

25 majority of each board.

26 (3) After receipt by the Commissioner of the papers

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1 specified in subsection (2), he shall approve or disapprove

2 the merger agreement. The Commissioner shall not approve the

3 agreement unless he shall be of the opinion and finds:

4 (a) That the resulting bank meets the requirements of

5 this Act for the formation of a new bank at the proposed

6 place of business of the resulting bank;

7 (b) That the same matters exist in respect of the

8 resulting bank which would have been required under

9 Section 10 of this Act for the organization of a new bank;

10 and

11 (c) That the merger agreement is fair to all persons

12 affected. If the Commissioner disapproves the merger

13 agreement, he shall state his objections in writing and

14 give an opportunity to the merging bank and the merging

15 trust company to obviate such objections.

16 (4) To be effective, if approved by the Commissioner, a

17 merger of a bank and a trust company where there is to be a

18 resulting bank must be approved by the affirmative vote of the

19 holders of at least two-thirds of the outstanding shares of

20 stock of the merging bank entitled to vote at a meeting called

21 to consider such action, unless holders of preferred stock are

22 entitled to vote as a class in respect thereof, in which event

23 the proposed merger shall be adopted upon receiving the

24 affirmative vote of the holders of at least two-thirds of the

25 outstanding shares of each class of shares entitled to vote as

26 a class in respect thereof and of the total outstanding shares

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1 entitled to vote at such meeting and must be approved by the

2 stockholders of the merging trust company as provided by the

3 Act under which it is organized. The prescribed vote by the

4 merging bank and the merging trust company shall constitute

5 the adoption of the charter and by-laws of the continuing

6 bank, including the amendments in the merger agreement, as the

7 charter and by-laws of the resulting bank. Written or printed

8 notice of the meeting of the stockholders of the merging bank

9 shall be given to each stockholder of record entitled to vote

10 at such meeting at least thirty days before such meeting and in

11 the manner provided in this Act for the giving of notice of

12 meetings of stockholders. The notice shall state that

13 dissenting stockholders of the merging trust company will be

14 entitled to payment of the value of those shares which are

15 voted against approval of the merger, if a proper demand is

16 made on the resulting bank and the requirements of the Act

17 under which the merging trust company is organized are

18 satisfied.

19 (5) Unless a later date is specified in the merger

20 agreement, the merger shall become effective upon the filing

21 with the Commissioner of the executed merger agreement,

22 together with copies of the resolutions of the stockholders of

23 the merging bank and the merging trust company approving it,

24 certified by the president or a vice-president or, the cashier

25 and also by the secretary or other officer charged with

26 keeping the records. The charter of the merging trust company

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1 shall thereupon automatically terminate. The Commissioner

2 shall thereupon issue to the continuing bank a certificate of

3 merger which shall specify the name of the merging trust

4 company, the name of the continuing bank and the amendments to

5 the charter of the continuing bank provided for by the merger

6 agreement. Such certificate shall be conclusive evidence of

7 the merger and of the correctness of all proceedings therefor

8 in all courts and places including the office of the Secretary

9 of State, and said certificate shall be recorded.

10 (6) In the case of a conversion, a trust company shall

11 apply for a charter by filing with the Commissioner:

12 (a) A certificate signed by its president, or a

13 vice-president, and by a majority of the entire board of

14 directors setting forth the corporate action taken in

15 compliance with the provisions of the Act under which it

16 is organized governing the conversion of a trust company

17 to a bank or governing the merger of a trust company into

18 another corporation;

19 (b) The plan of conversion and the proposed charter

20 approved by the stockholders for the operation of the

21 trust company as a bank. The plan of conversion shall

22 contain (i) the name and location proposed for the

23 converting trust company; (ii) a list of its stockholders

24 as of the date of the stockholders' approval of the plan of

25 conversion; (iii) the amount of its capital, surplus and

26 reserve for operating expenses; (iv) the classes and the

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1 number of shares of stock and the par value of each share;

2 (v) the charter which is to be the charter of the resulting

3 bank; and (vi) a detailed financial statement showing the

4 assets and liabilities of the converting trust company;

5 (c) A statement that the plan of conversion is subject

6 to approval by the Commissioner and that, whether approved

7 or disapproved, the converting trust company will pay the

8 Commissioner's expenses of examination; and

9 (d) Such other instruments as the Commissioner may

10 reasonably require to enable him to discharge his duties

11 with respect to the conversion.

12 (7) After receipt by the Commissioner of the papers

13 specified in subsection (6), he shall approve or disapprove

14 the plan of conversion. The Commissioner shall not approve the

15 plan of conversion unless he shall be of the opinion and finds:

16 (a) That the resulting bank meets the requirements of

17 this Act for the formation of a new bank at the proposed

18 place of business of the resulting bank;

19 (b) That the same matters exist in respect of the

20 resulting bank which would have been required under

21 Section 10 of this Act for the organization of a new bank;

22 and

23 (c) That the plan of conversion is fair to all persons

24 affected.

25 If the commissioner disapproves the plan of conversion, he

26 shall state his objections in writing and give an opportunity

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1 to the converting trust company to obviate such objections.

2 (8) Unless a later date is specified in the plan of

3 conversion, the conversion shall become effective upon the

4 Commissioner's approval, and the charter proposed in the plan

5 of conversion shall constitute the charter of the resulting

6 bank. The Commissioner shall issue a certificate of conversion

7 which shall specify the name of the converting trust company,

8 the name of the resulting bank and the charter provided for by

9 said plan of conversion. Such certificate shall be conclusive

10 evidence of the conversion and of the correctness of all

11 proceedings therefor in all courts and places including the

12 office of the Secretary of State, and such certificate shall

13 be recorded.

14 (8.5) A special purpose trust company under Article IIA of

15 the Corporate Fiduciary Act may merge with a State bank or

16 convert to a State bank as if the special purpose trust company

17 were a trust company under Article II of the Corporate

18 Fiduciary Act, subject to rules adopted by the Department.

19 (9) In the case of either a merger or a conversion under

20 this Section 30, the resulting bank shall be considered the

21 same business and corporate entity as each merging bank and

22 merging trust company or as the converting trust company with

23 all the property, rights, powers, duties and obligations of

24 each as specified in Section 28 of this Act.

25 (Source: P.A. 91-357, eff. 7-29-99.)

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1 Section 90-20. The Corporate Fiduciary Act is amended by

2 changing Sections 1-5.08, 2-1, 4-1, 4-2, 4-5, 4A-15, and 5-1

3 and by adding Article IIA as follows:

4 (205 ILCS 620/1-5.08) (from Ch. 17, par. 1551-5.08)

5 Sec. 1-5.08. "Foreign corporation" means:

6 (a) any bank, savings and loan association, savings bank,

7 or other corporation, limited liability company, or other

8 entity now or hereafter organized under the laws of any state

9 or territory of the United States of America, including the

10 District of Columbia, other than the State of Illinois;

11 (b) any national banking association having its principal

12 place of business in any state or territory of the United

13 States of America, including the District of Columbia, other

14 than the State of Illinois; and

15 (c) any federal savings and loan association or federal

16 savings bank having its principal place of business in any

17 state or territory of the United States of America, including

18 the District of Columbia, other than the State of Illinois.

19 (Source: P.A. 91-97, eff. 7-9-99.)

20 (205 ILCS 620/2-1) (from Ch. 17, par. 1552-1)

21 Sec. 2-1. (a) Any corporation which has been or shall be

22 incorporated under the general corporation laws of this State

23 and any limited liability company established under the

24 Limited Liability Company Act for the purpose of accepting and

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1 executing trusts, and any state bank, state savings and loan

2 association, state savings bank, or other special corporation

3 now or hereafter authorized by law to accept or execute

4 trusts, may be appointed to act as a fiduciary in any capacity

5 a natural person or corporation may act, and shall include,

6 but not be limited to, acting as assignee or trustee by deed,

7 and executor, guardian or trustee by will, custodian under the

8 Illinois Uniform Transfers to Minors Act and such appointment

9 shall be of like force as in case of appointment of a natural

10 person and shall be designated a corporate fiduciary.

11 (b) No corporate fiduciary shall dissolve or cease its

12 corporate existence without prior notice to and approval by

13 the Commissioner and compliance with the requirements of

14 Section 7-1 of this Act.

15 (Source: P.A. 100-863, eff. 8-14-18.)

16 (205 ILCS 620/Art. IIA heading new)

17 ARTICLE IIA. SPECIAL PURPOSE TRUST COMPANY

18 AUTHORITY AND ORGANIZATION

19 (205 ILCS 620/2A-1 new)

20 Sec. 2A-1. Purpose. The General Assembly finds that

21 corporate fiduciaries perform a vital service in the custody,

22 safekeeping, and management of physical assets, traditional

23 electronic assets, and emerging digital assets for customers;

24 that it is in the public interest that trust companies may be

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1 organized for the special purpose of providing fiduciary

2 custodial services and related services to customers; that the

3 operation of special purpose trust companies is impressed with

4 a public interest such that it should be supervised as an

5 activity under this Act; and that such special purpose trust

6 companies should obtain their authority, conduct their

7 operations, and be supervised as corporate fiduciaries as

8 provided in this Act.

9 (205 ILCS 620/2A-2 new)

10 Sec. 2A-2. Special purpose trust company. Any corporation

11 that has been or shall be incorporated under the general

12 corporation laws of this State and any limited liability

13 company established under the Limited Liability Company Act

14 for the special purpose of providing fiduciary custodial

15 services or providing other like or related services as

16 specified by rule, consistent with this Article, may be

17 appointed to act as a fiduciary with respect to such services

18 and shall be designated a special purpose trust company.

19 (205 ILCS 620/2A-3 new)

20 Sec. 2A-3. Certificate of authority.

21 (a) It shall be lawful for any person to engage in the

22 activity of a special purpose trust company after the

23 effective date of this amendatory Act of the 104th General

24 Assembly upon filing an application for and procuring from the

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1 Secretary a certificate of authority stating that the person

2 has complied with the requirements of this Act and is

3 qualified to engage in the activity of a special purpose trust

4 company.

5 (b) No natural person or natural persons, firm,

6 partnership, or corporation not having been authorized under

7 this Act shall transact in the activity of a special purpose

8 trust company. A person who violates this Section is guilty of

9 a Class A misdemeanor and the Attorney General or State's

10 Attorney of the county in which the violation occurs may

11 restrain the violation by a complaint for injunctive relief.

12 (c) Any entity that holds a certificate of authority under

13 Article II of this Act may engage in the activity of a special

14 purpose trust company without applying for or receiving a

15 certificate of authority under this Article IIA.

16 (d) Nothing in this Section shall limit the authority of a

17 depository institution to provide nonfiduciary custodial

18 services consistent with its charter in accordance with

19 applicable law and subject to any limitations and restrictions

20 imposed by its chartering authority.

21 (205 ILCS 620/2A-4 new)

22 Sec. 2A-4. Rulemaking and organization.

23 (a) The Department shall adopt rules for the

24 administration of this Article, including, but not limited to:

25 rules for defining statutory terms; applying for a certificate

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1 of authority; review, investigation, and approval of

2 application for certificate of authority; capital

3 requirements; office location and name; collateralizing

4 fiduciary assets; and general corporate powers. The authority

5 of this subsection (a) is in addition to, and in no way limits,

6 the authority of the Secretary under subsection (a) of Section

7 5-1.

8 (b) Articles III, V, VI, VII, VIII, and IX of this Act

9 shall apply to a special purpose trust company under this

10 Article as if the special purpose trust company were a trust

11 company authorized under Article II of this Act, subject to

12 any rules adopted by the Department.

13 (205 ILCS 620/4-1) (from Ch. 17, par. 1554-1)

14 Sec. 4-1. Foreign corporate fiduciary; certificate of

15 authority. After July 13, 1953, no foreign corporation,

16 including banks, savings banks, and savings and loan

17 associations, now or hereafter organized under the laws of any

18 other state or territory, and no national banking association

19 having its principal place of business in any other state or

20 territory or federal savings and loan association or federal

21 savings bank having its principal place of business in any

22 other state or territory, may procure a certificate of

23 authority under Article II of this Act and any certificate of

24 authority heretofore issued hereunder to any such foreign

25 corporation or to any such national banking association shall

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1 become null and void on July 13, 1953, except that any such

2 foreign corporation or any such national banking association

3 actually acting as trustee, executor, administrator,

4 administrator to collect, guardian, or in any other ~~like~~

5 fiduciary capacity in this State on July 13, 1953, may

6 continue to act as such fiduciary in that particular trust or

7 estate until such time as it has completed its duties

8 thereunder. Such foreign corporation and such national banking

9 association shall be subject to the provisions in this Article

10 IV, regardless of whether its certificate of authority was

11 obtained before July 13, 1953. The right and eligibility of

12 any foreign corporation, any national banking association

13 having its principal place of business in any other state or

14 territory or any federal savings and loan association or

15 federal savings bank having its principal place of business in

16 any other state or territory hereafter to act as trustee,

17 executor, administrator, administrator to collect, guardian,

18 or in any other ~~like~~ fiduciary capacity in this State shall be

19 governed solely by the provisions of this Act. Provided,

20 however, that the Commissioner shall not be required to

21 conduct an annual examination of such foreign corporation

22 pursuant to Section 5-2 of this Act, but may examine such

23 foreign corporation as the Commissioner deems appropriate.

24 "Principal place of business" of any bank, federal savings and

25 loan association or savings bank, for purposes of this Article

26 IV, means the principal office as designated on the charter by

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1 its principal regulator.

2 (Source: P.A. 91-97, eff. 7-9-99.)

3 (205 ILCS 620/4-2) (from Ch. 17, par. 1554-2)

4 Sec. 4-2. Foreign corporation; eligibility. Any foreign

5 corporation may act in this State as trustee, executor,

6 administrator, administrator to collect, guardian, or in any

7 other like fiduciary capacity, whether the appointment is by

8 will, deed, court order or otherwise, without complying with

9 any laws of this State relating to the qualification of

10 corporations organized under the laws of this State to conduct

11 a trust business or laws relating to the qualification of

12 foreign corporations, provided only (1) such foreign

13 corporation is authorized by the laws of the state of its

14 organization or domicile to act as a fiduciary in that state,

15 and (2) a corporation organized under the laws of this State, a

16 national banking association having its principal place of

17 business in this State, and a federal savings and loan

18 association or federal savings bank having its principal place

19 of business in this State and authorized to act as a fiduciary

20 in this State, may, in such other state, act in a similar

21 fiduciary capacity or capacities, as the case may be, upon

22 conditions and qualifications which the Commissioner finds are

23 not unduly restrictive when compared to those imposed by the

24 laws of Illinois. Any foreign corporation eligible to act in a

25 fiduciary capacity in this State pursuant to the provisions of

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1 this Act, shall be deemed qualified to accept and execute

2 trusts in this State within the meaning of this Act and the

3 Probate Act of 1975, approved August 7, 1975, as amended. No

4 foreign corporation shall be permitted to act as trustee,

5 executor, administrator, administrator to collect, guardian or

6 in any other ~~like~~ fiduciary capacity in this State except as

7 provided in Article IV of this Act; however, any foreign

8 corporation actually acting in any such fiduciary capacity in

9 this State on July 13, 1953, although not eligible to so act

10 pursuant to the provisions of this Article IV, may continue to

11 act as fiduciary in that particular trust or estate until such

12 time as it has completed its duties thereunder.

13 (Source: P.A. 92-685, eff. 7-16-02.)

14 (205 ILCS 620/4-5) (from Ch. 17, par. 1554-5)

15 Sec. 4-5. Certificate of authority; fees; certificate of

16 reciprocity.

17 (a) Prior to the time any foreign corporation acts in this

18 State as testamentary trustee, trustee appointed by any court,

19 trustee under any written agreement, declaration or instrument

20 of trust, executor, administrator, administrator to collect,

21 guardian or in any other ~~like~~ fiduciary capacity, such foreign

22 corporation shall apply to the Commissioner of Banks and Real

23 Estate for a certificate of authority with reference to the

24 fiduciary capacity or capacities in which such foreign

25 corporation proposes to act in this State, and the

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1 Commissioner of Banks and Real Estate shall issue a

2 certificate of authority to such corporation concerning only

3 the fiduciary capacity or such of the fiduciary capacities to

4 which the application pertains and with respect to which he

5 has been furnished satisfactory evidence that such foreign

6 corporation meets the requirements of Section 4-2 of this Act.

7 The certificate of authority shall set forth the fiduciary

8 capacity or capacities, as the case may be, for which the

9 certificate is issued, and shall recite and certify that such

10 foreign corporation is eligible to act in this State in such

11 fiduciary capacity or capacities, as the case may be, pursuant

12 to the provisions of this Act. The certificate of authority

13 shall remain in full force and effect until such time as such

14 foreign corporation ceases to be eligible so to act under the

15 provisions of this Act.

16 (b) Each foreign corporation making application for a

17 certificate of authority shall pay reasonable fees to the

18 Commissioner of Banks and Real Estate as determined by the

19 Commissioner for the services of his office.

20 (c) Any foreign corporation holding a certificate of

21 reciprocity which recites and certifies that such foreign

22 corporation is eligible to act in this State in any such

23 fiduciary capacity pursuant to the provisions of Article IV of

24 this Act or any predecessor Act upon the same subject, issued

25 prior to the effective date of this amendatory Act of 1987 may

26 act in this State under such certificate of reciprocity in any

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1 such fiduciary capacity without applying for a new certificate

2 of authority. Such certificate of reciprocity shall remain in

3 full force and effect until such time as such foreign

4 corporation ceases to be eligible so to act under the

5 provisions of Article IV of this Act.

6 (d) Any foreign corporation acting in Illinois under a

7 certificate of authority or a certificate of reciprocity shall

8 report changes in its name or address to the Commissioner and

9 shall notify the Commissioner when it is no longer serving as a

10 corporate fiduciary in Illinois.

11 (e) The provisions of this Section shall not apply to a

12 foreign corporation establishing or acquiring and maintaining

13 a place of business in this State to conduct business as a

14 fiduciary in accordance with Article IVA of this Act.

15 (Source: P.A. 92-483, eff. 8-23-01.)

16 (205 ILCS 620/4A-15)

17 Sec. 4A-15. Representative offices.

18 (a) A foreign corporation conducting fiduciary activities

19 outside this State, but not conducting fiduciary activities in

20 this State may establish a representative office under the

21 Foreign Bank Representative Office Act. At these offices, the

22 foreign corporation may market and solicit fiduciary services

23 and provide back office and administrative support to the

24 foreign corporation's fiduciary activities, but it may not

25 engage in fiduciary activities.

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1 (b) A foreign corporation invested with trust powers or

2 authority to act as a fiduciary pursuant to the laws of its

3 home state but not conducting fiduciary activities must apply

4 for and procure a license under the Foreign Bank

5 Representative Office Act before establishing an office in

6 this State for the purpose of marketing, soliciting, or

7 transacting any service or product, unless such office is

8 otherwise established as permitted by and in accordance with

9 this Act, the Illinois Banking Act, the Savings Bank Act, the

10 Foreign Banking Office Act, or any Act specified by rules

11 adopted under this Act.

12 (Source: P.A. 92-483, eff. 8-23-01; 92-811, eff. 8-21-02.)

13 (205 ILCS 620/5-1) (from Ch. 17, par. 1555-1)

14 Sec. 5-1. Commissioner's powers. The Commissioner of Banks

15 and Real Estate shall have the following powers and authority

16 and is charged with the duties and responsibilities designated

17 in this Act:

18 (a) To promulgate, in accordance with the Illinois

19 Administrative Procedure Act, reasonable rules for the purpose

20 of administering the provisions of this Act, for the purpose

21 of protecting consumers of this State as may be necessary and

22 appropriate, and for the purpose of incorporating by reference

23 rules promulgated by the Federal Deposit Insurance

24 Corporation, the Board of Governors of the Federal Reserve

25 System, the Office of the Comptroller of the Currency, the

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1 Office of Thrift Supervision, or their successors that pertain

2 to corporate fiduciaries, including, but not limited to,

3 standards for the operation and conduct of the affairs of

4 corporate fiduciaries;

5 (b) To issue orders for the purpose of administering the

6 provisions of this Act and any rule promulgated in accordance

7 with this Act;

8 (c) To appoint hearing officers to conduct hearings held

9 pursuant to any of the powers granted to the Commissioner

10 under this Section for the purpose of administering this Act

11 and any rule promulgated in accordance with this Act;

12 (d) To subpoena witnesses, to compel their attendance, to

13 administer an oath, to examine any person under oath and to

14 require the production of any relevant books, papers, accounts

15 and documents in the course of and pursuant to any

16 investigation being conducted, or any action being taken, by

17 the Commissioner in respect of any matter relating to the

18 duties imposed upon, or the powers vested in, the Commissioner

19 under the provisions of this Act, or any rule or regulation

20 promulgated in accordance with this Act;

21 (e) To conduct hearings;

22 (f) To promulgate the form and content of any applications

23 required under this Act;

24 (g) To impose civil penalties of up to $100,000 against

25 any person or corporate fiduciary for each violation of any

26 provision of this Act, any rule promulgated in accordance with

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1 this Act, any order of the Commissioner or any other action

2 which, in the Commissioner's discretion, is a detriment or

3 impediment to accepting or executing trusts; and

4 (h) To address any inquiries to any corporate fiduciary,

5 or the officers thereof, in relation to its doings and

6 conditions, or any other matter connected with its affairs,

7 and it shall be the duty of any corporate fiduciary or person

8 so addressed, to promptly reply in writing to such inquiries.

9 The Commissioner may also require reports from any corporate

10 fiduciary at any time he may deem desirable.

11 (Source: P.A. 96-1365, eff. 7-28-10.)

12 Section 90-25. The Consumer Fraud and Deceptive Business

13 Practices Act is amended by adding Section 2HHHH as follows:

14 (815 ILCS 505/2HHHH new)

15 Sec. 2HHHH. Violations of the Digital Assets and Consumer

16 Protection Act. Any person who violates Article 5 of the

17 Digital Assets and Consumer Protection Act commits an unlawful

18 practice within the meaning of this Act.

19 Article 99. Non-acceleration and Effective Date

20 Section 99-95. No acceleration or delay. Where this Act

21 makes changes in a statute that is represented in this Act by

22 text that is not yet or no longer in effect (for example, a

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1 Section represented by multiple versions), the use of that

2 text does not accelerate or delay the taking effect of (i) the

3 changes made by this Act or (ii) provisions derived from any

4 other Public Act.

5 Section 99-99. Effective date. This Act takes effect upon

6 becoming law.".