Rep. Edgar González, Jr.

Filed: 3/20/2025

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LRB104 04637 BAB 24129 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" means 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.

22 "Digital asset business activity" means any of the

23 following:

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

25 asset.

26 (2) Engaging in digital asset administration.

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1 (3) Any other business activity involving digital

2 assets designated by rule by the Department as may be

3 necessary and appropriate for the protection of residents.

4 "Digital asset business activity" does not include the

5 development and dissemination of software in and of itself.

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

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

8 following:

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

10 forms of digital assets.

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

12 assets.

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

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

15 capacity.

16 "Executive officer" includes, without limitation, an

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

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

19 responsible individual, of a person.

20 "Federally insured depository institution" means an

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

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

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

24 101(7) of the Federal Credit Union Act, 12 U.S.C. 1752(7), as

25 amended.

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

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1 value issued by the United States or a foreign government that

2 is designated as legal tender in its country of issuance.

3 "Insolvent" means any of the following:

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

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

6 bona fide dispute.

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

8 (3) Being insolvent within the meaning of federal

9 bankruptcy law.

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

11 corporation, business trust, estate, trust, partnership,

12 proprietorship, syndicate, limited liability company,

13 association, joint venture, government, governmental

14 subsection, agency or instrumentality, public corporation or

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

16 commercial entity.

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

18 subject to any rules adopted by the Department:

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

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

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

22 service providers;

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

24 currency;

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

26 at all;

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

2 future purchase or delivery of goods or services;

3 (5) is honored upon presentation;

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

5 at all;

6 (7) is governed by the Uniform Money Transmission

7 Modernization Act; and

8 (8) complies with any other condition designated by

9 rule by the Department as may be necessary and appropriate

10 for the protection of residents.

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

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

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

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

15 is retrievable in perceivable form.

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

17 "Resident" means any of the following:

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

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

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

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

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

23 domiciled in this State.

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

25 account disputes, and requests for documentation a covered

26 person receives from residents.

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1 "Responsible individual" means an individual who has

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

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

4 asset business activity in this State.

5 "Secretary" means the Secretary of Financial and

6 Professional Regulation and any authorized representative of

7 the Secretary.

8 "Service provider" means any person that provides a

9 material service to a covered person in connection with the

10 offering or provision by that covered person of a digital

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

12 either:

13 (1) Participates in designing, operating, or

14 maintaining the digital asset business activity.

15 (2) Processes transactions relating to the digital

16 asset business activity, other than unknowingly or

17 incidentally transmitting or processing financial data in

18 a manner that the data is undifferentiated from other

19 types of data of the same form as the data the person

20 transmits or processes.

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

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

23 any territory or insular possession subject to the

24 jurisdiction of the United States.

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

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

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

2 other than the resident.

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

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

5 following:

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

7 storage of another person.

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

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

10 same resident.

11 (3) Relinquishing custody or control of a digital

12 asset to another person.

13 "United States dollar equivalent of digital assets" means

14 the equivalent value of a particular digital asset in United

15 States dollars shown on a covered exchange regulated in the

16 United States for a particular date or period specified in

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

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

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

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

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

22 included.

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

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

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

26 unless the context otherwise requires, as amended thereafter.

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1 Section 1-10. Applicability.

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

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

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

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

6 federal law and except as otherwise provided in subsections

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

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

9 or storage of a digital asset or to digital asset

10 administration to the extent that:

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

12 78a et seq., or the Illinois Securities Law of 1953

13 govern the activity as a security transaction and the

14 activity is actually regulated for the purpose of

15 investor protection by the U.S. Securities and

16 Exchange Commission or the Illinois Secretary of

17 State; or

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

19 seq., governs the activity as a contract of sale of a

20 commodity for future delivery or a swap and the

21 activity is actually regulated for the purpose of

22 investor protection by the U.S. Commodity Futures

23 Trading Commission.

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

25 consistent with affording the greatest protection to

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1 residents and the Department's authority under subsection

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

3 enforcement under any federal law applicable to digital

4 asset business activity. This subsection shall not be

5 construed to exempt an activity solely because a financial

6 regulatory agency has anti-fraud and anti-manipulation

7 enforcement authority over the activity.

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

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

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

11 or local government, or a foreign government or a

12 subdivision, department, agency, or instrumentality of a

13 foreign government.

14 (2) A federally insured depository institution.

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

16 otherwise engaging in fiduciary activities.

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

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

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

20 its business.

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

22 purchase or sale of goods or services for the person's own

23 personal, family, or household purposes.

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

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

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

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

2 authorized for a credit union chartered under the laws of

3 this State.

4 Nothing in this Act grants persons described in this

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

6 otherwise granted under existing law.

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

8 activity is governed under this Act or another Act that

9 governs money transmissions. This subsection (d) shall not be

10 applied in a manner inconsistent with the protection of

11 residents.

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

13 Department, by rule or order, may conditionally or

14 unconditionally exempt any person, digital asset, or

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

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

17 any rule adopted under this Act, to the extent that the

18 exemption is necessary or appropriate, in the public interest,

19 and consistent with the protection of residents.

20 Section 1-15. General powers and duties.

21 (a) The Department shall regulate digital asset business

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

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

24 Department shall exercise nonexclusive oversight and

25 enforcement under any federal law applicable to digital asset

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1 business activity.

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

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

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

5 applicable to digital asset business activity.

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

7 powers, and duties in carrying out its responsibilities under

8 this Act and any other law applicable to digital asset

9 business activity in this State:

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

11 other authorization under this Act;

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

13 other authorization under this Act;

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

15 authorizations under this Act;

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

17 complaints made by any person relating to any digital

18 asset business activity in this State;

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

20 (A) applications for registrations or other

21 authorizations under this Act; and

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

23 to be made under this Act;

24 (6) to subpoena documents and witnesses and compel

25 their attendance and production, to administer oaths, and

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

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1 materials relevant to any inquiry authorized by this Act

2 or other law applicable to digital asset business activity

3 in this State;

4 (7) to issue orders against any person:

5 (A) if the Secretary has reasonable cause to

6 believe that an unsafe, unsound, or unlawful practice

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

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

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

10 agreement with the Secretary; or

11 (C) for the purpose of administering the

12 provisions of this Act or other law applicable to

13 digital asset business activity and any rule adopted

14 in accordance with this Act or other law applicable to

15 digital asset business activity;

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

17 the directors, officers, or employees of the covered

18 person, or the affiliates or service providers of the

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

20 activities and conditions or any other matter connected

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

22 addressed to promptly reply in writing to those inquiries;

23 the Secretary may also require reports from any covered

24 person at any time the Secretary chooses;

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

26 person, affiliate, or service provider;

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

2 state or federal law applicable to digital asset business

3 activity;

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

5 for services, and assessments to defray operating

6 expenses, including direct and indirect costs, of

7 administering this Act and other laws applicable to

8 digital asset business activity;

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

10 special assistants as needed to effectively and

11 efficiently administer this Act and other laws applicable

12 to digital asset business activity;

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

14 out the purposes of this Act;

15 (14) to exercise visitorial power over a covered

16 person, affiliate, or service provider;

17 (15) to enter into cooperative agreements with federal

18 and state regulatory authorities and to accept reports of

19 examinations from federal and state regulatory

20 authorities;

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

22 examiners to monitor the affairs of a covered person,

23 affiliate, or service provider with whatever frequency the

24 Secretary determines appropriate and to charge the covered

25 person for reasonable and necessary expenses of the

26 Secretary, if in the opinion of the Secretary, an

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1 emergency exists or appears likely to occur;

2 (17) to impose civil penalties against a covered

3 person, affiliate, or service provider for failing to

4 respond to a regulatory request or reporting requirement;

5 and

6 (18) to conduct investigations, market surveillance,

7 and research, studies, and analyses of matters affecting

8 the interests of users of digital assets;

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

10 necessary to educate and protect users of digital assets;

11 (20) to develop and implement initiatives and programs

12 to promote responsible innovation in digital asset

13 business activity; and

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

15 desirable to carry out the purposes and provisions of this

16 Act and other laws applicable to digital asset business

17 activity.

18 (d) The Department may share any information obtained

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

20 asset business activity with law enforcement officials or

21 other regulatory agencies.

22 Section 1-20. Funds.

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

24 under this Act shall be deposited into the Consumer Protection

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

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1 treasury. The amounts deposited into the Consumer Protection

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

3 the Department in administering this Act and other financial

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

5 the practice of paying expenses involving salaries,

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

7 officers and employees by appropriation from the General

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

9 Consumer Protection Fund may be transferred to the Professions

10 Indirect Cost Fund or any other Department fund.

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

12 investigations and examinations provided for in this Act,

13 shall be borne by and assessed against persons regulated by

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

15 in the following categories:

16 (1) investigation of registrants and registration

17 applicant fees;

18 (2) examination fees;

19 (3) contingent fees; and

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

21 administer this Act.

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

23 covered persons, which shall be nonrefundable unless otherwise

24 indicated, for the expenses of administering this Act as

25 follows:

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

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

2 the supervision of the covered person plus actual travel

3 costs for any examination of digital asset business

4 activity pursuant to the Act.

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

6 its pro rata share of the cost for the administration of

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

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

9 deficit actually incurred in the administration of the Act

10 in prior years. The total annual assessment for all

11 registrants shall initially be divided into a

12 transaction-based assessment and a custody-based

13 assessment, each equal to approximately half the cost for

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

15 share of the transaction-based assessment shall be the

16 percentage that the total volume of digital asset

17 transactions conducted on behalf of residents by the

18 registrant bears to the total volume of digital asset

19 transactions by all registrants in Illinois. Each

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

21 assessment shall be the percentage that the total United

22 States dollar value of digital assets held in custody or

23 controlled by the registrant for residents bears to the

24 total United States dollar value held in custody or

25 controlled by all registrants in Illinois for residents.

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

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

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

3 Department is authorized to consider setting fees for

4 digital asset business activity based on the value of

5 digital assets transacted by covered persons, volume of

6 digital assets transacted by covered persons, the value of

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

8 volume of digital assets held in custody by covered

9 persons.

10 Article 5. Customer Protections

11 Section 5-5. Customer disclosures.

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

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

14 customer disclosures required by subsection (b) and any

15 additional disclosures the Department determines by rule to be

16 necessary and appropriate for the protection of residents. The

17 Department may determine by rule the time and form required

18 for disclosures. A disclosure required by this Section shall

19 be made separately from any other information provided by the

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

21 record the resident may keep.

22 (b) Before engaging in digital asset business activity

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

24 extent applicable to the digital asset business activity the

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1 covered person will undertake with the resident and subject to

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

3 following:

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

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

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

7 and the timing of the fees and charges.

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

9 covered person is covered by either of the following:

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

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

12 (i) Up to the full United States dollar

13 equivalent of digital assets placed under the

14 custody or control of, or purchased from, the

15 covered person as of the date of the placement or

16 purchase, including the maximum amount provided by

17 insurance under the Federal Deposit Insurance

18 Corporation or National Credit Union

19 Administration or otherwise available from the

20 Securities Investor Protection Corporation.

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

22 dollar equivalent of the digital assets placed

23 under the custody or control of or purchased from

24 the covered person, the maximum amount of coverage

25 for each resident expressed in the United States

26 dollar equivalent of the digital asset.

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1 (iii) If not applicable to the product or

2 service provided by the covered person, a clear

3 and conspicuous statement that the product is not

4 insured, as applicable, by the Federal Deposit

5 Insurance Corporation, National Credit Union

6 Administration, or the Securities Investor

7 Protection Corporation.

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

9 including cybertheft or theft by other means.

10 (ii) A covered person shall disclose the terms

11 of the insurance policy to the resident in a

12 manner that allows the resident to understand the

13 specific insured risks that may result in partial

14 coverage of the resident's assets.

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

16 any exception to irrevocability.

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

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

19 unauthorized, mistaken, or accidental transfer or

20 exchange.

21 (B) The resident's responsibility to provide

22 notice to the covered person of an unauthorized,

23 mistaken, or accidental transfer or exchange.

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

25 from the covered person in case of an unauthorized,

26 mistaken, or accidental transfer or exchange.

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1 (D) General error resolution rights applicable to

2 an unauthorized, mistaken, or accidental transfer or

3 exchange.

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

5 resident's contact information with the covered

6 person.

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

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

9 differ from the date or time when the resident initiates

10 the instruction to make the transfer or exchange.

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

12 preauthorized payment or revoke authorization for a

13 transfer and the procedure to initiate a stop-payment

14 order or revoke authorization for a subsequent transfer.

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

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

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

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

19 other terms and conditions that have a material impact on

20 digital asset business activity with the resident, or the

21 policies applicable to the resident's account.

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

23 legal tender by the State of Illinois or the United

24 States.

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

26 the covered person's service was unavailable to customers

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1 seeking to engage in digital asset business activity due

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

3 the causes of each identified service outage.

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

5 paragraph, the covered person may list any steps the

6 covered person has taken to resolve underlying causes

7 for those outages.

8 (11) A disclosure, provided separately from the

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

10 this subsection and written prominently in bold type, that

11 the State of Illinois has not approved or endorsed any

12 digital assets or determined if this customer disclosure

13 is truthful or complete.

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

15 conclusion of a digital asset transaction with or on behalf of

16 a resident, a covered person shall provide the resident a

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

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

19 person, including the toll-free telephone number required

20 under Section 5-20.

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

22 the transaction.

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

24 charge for conversion of a digital asset to fiat currency

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

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

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1 daily confirmation in the initial disclosure under subsection

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

3 confirmation for all transactions with or on behalf of a

4 resident on that day instead of a per transaction

5 confirmation.

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

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

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

9 shall:

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

11 digital asset sufficient to satisfy the aggregate

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

13 (2) segregate such digital assets from the other

14 assets of the covered person; and

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

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

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

18 digital assets at the direction of such other persons.

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

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

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

22 the persons are entitled without regard to the time the

23 persons became entitled to the digital asset or the covered

24 person obtained control of the digital asset.

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

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

2 under subsection (a);

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

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

5 covered person.

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

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

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

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

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

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

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

13 against the covered person for receivership, the commencement

14 of any other judicial or administrative proceeding for its

15 dissolution or reorganization, or an action by a creditor

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

17 statutory trust. No digital asset impressed with a trust

18 pursuant to this subsection shall be subject to attachment,

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

20 except for a beneficiary of this statutory trust.

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

22 persons related to additional protections of customer assets,

23 including, but not limited to:

24 (1) rules requiring that digital assets and funds

25 controlled by the covered person on behalf of residents be

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

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1 digital assets and funds;

2 (2) rules related to qualified custodians that may

3 hold such segregated accounts;

4 (3) rules related to titling of such segregated

5 accounts;

6 (4) rules related to audit requirements for customer

7 assets;

8 (5) rules requiring compliance with specific

9 provisions of the Uniform Commercial Code applicable to

10 digital assets;

11 (6) rules restricting selling, transferring,

12 assigning, lending, hypothecating, pledging, or otherwise

13 using or encumbering customer assets; and

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

15 appropriate for the protection of residents or necessary

16 to effectuate the purposes of this Section.

17 Section 5-15. Covered exchanges.

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

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

20 digital asset that the covered exchange can exchange on behalf

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

22 Department that the covered exchange has done the following:

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

24 be deemed a security by federal or state regulators.

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

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1 all material facts relating to conflicts of interest that

2 are associated with the covered exchange and the digital

3 asset.

4 (C) Conducted a comprehensive risk assessment designed

5 to ensure consumers are adequately protected from

6 cybersecurity risk, risk of malfeasance, including theft,

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

8 risks, including price manipulation and fraud, and any

9 other material risks.

10 (D) Established policies and procedures to reevaluate

11 the appropriateness of the continued listing or offering

12 of the digital asset, including an evaluation of whether

13 material changes have occurred.

14 (E) Established policies and procedures to cease

15 listing or offering the digital asset, including

16 notification to affected consumers and counterparties.

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

18 Department as may be necessary and appropriate for the

19 protection of residents.

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

21 required for any digital asset approved for listing, on or

22 before the effective date of this Act, by the New York

23 Department of Financial Services pursuant to Part 200 of Title

24 23 of the New York Code of Rules and Regulations, if the

25 covered exchange provides notification to the Department on a

26 form provided by the Department.

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

2 offered a digital asset without appropriate certification or

3 after a finding that misrepresentations were made in the

4 certification process, the Department may require the covered

5 exchange to cease listing or offering the digital asset and

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

7 Act.

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

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

10 the covered exchange receives fully and promptly.

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

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

13 possible under prevailing market conditions. Compliance with

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

15 not limited to, all of the following:

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

17 including price and volatility.

18 (ii) The size and type of transaction.

19 (iii) The number of markets checked.

20 (iv) Accessibility of appropriate pricing.

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

22 Department as may be necessary and appropriate for the

23 protection of residents.

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

25 review aggregated trading records of residents against

26 benchmarks to determine execution quality, investigate the

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

2 issues identified in that review.

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

4 exchange shall not interject a third party between the covered

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

6 inconsistent with this subsection.

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

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

9 advantageous to the resident, the burden of showing the

10 acceptable circumstances for doing so is on the covered

11 exchange.

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

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

14 website a toll-free telephone number through which a resident

15 can contact the covered person for requests for assistance and

16 receive live customer assistance, subject to any rules adopted

17 by the Department.

18 (b) A covered person shall implement reasonable policies

19 and procedures for accepting, processing, investigating, and

20 responding to requests for assistance in a timely and

21 effective manner. Such policies and procedures shall include

22 all of the following:

23 (1) A procedure for resolving disputes between the

24 covered person and a resident.

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

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1 unauthorized, mistaken, or accidental digital asset

2 business activity transaction.

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

4 with the covered person and for the resolution of the

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

6 resident as soon as reasonably practical of the resolution

7 and the reasons for the resolution.

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

9 Department as may be necessary and appropriate for the

10 protection of residents.

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

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

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

14 registration under this Act is required may bring or maintain

15 any action in any court to collect compensation for the

16 performance of the registrable services without alleging and

17 proving that the person was the holder of a valid registration

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

19 services.

20 Article 10. Compliance

21 Section 10-5. General requirements.

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

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

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

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

3 (b) Each registrant shall designate a qualified individual

4 or individuals responsible for coordinating and monitoring

5 compliance with subsection (a).

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

7 enforce written compliance policies and procedures, in

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

9 by the Department, which policies and procedures must be

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

11 or an equivalent governing body of the registrant.

12 Section 10-10. Required policies and procedures.

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

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

15 implement, update, and enforce, written compliance policies

16 and procedures for all of the following:

17 (1) A cybersecurity program.

18 (2) A business continuity program.

19 (3) A disaster recovery program.

20 (4) An anti-fraud program.

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

22 financing of terrorism program.

23 (6) An operational security program.

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

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

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1 are relevant to the digital asset business activity

2 contemplated by the registrant with or on behalf of

3 residents and to assist the registrant in achieving the

4 purposes of other State laws and federal laws if violation

5 of those laws has a remedy under this Act.

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

7 paragraph shall specify the policies and procedures that

8 the registrant undertakes to minimize the risk that the

9 registrant facilitates the exchange of unregistered

10 securities.

11 (8) A conflict of interest program.

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

13 Section 5-20.

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

15 procedure the Department establishes by rule as necessary

16 for the protection of residents or for the safety and

17 soundness of the registrant's business or to effectuate

18 the purposes of this Act.

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

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

21 registrant's contemplated digital asset business activity with

22 or on behalf of residents, considering the circumstances of

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

24 policy and implementing procedure shall be compatible with

25 other policies and the procedures implementing them and not

26 conflict with policies or procedures applicable to the

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1 registrant under other State law.

2 (c) A registrant's anti-fraud 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 fraud, which shall include any form of market manipulation

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

8 associated persons, or its customers.

9 (2) Protection against any material risk related to

10 fraud identified by the Department or the registrant.

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

12 program, policies, and procedures.

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

14 the financing of terrorism program shall include, at a

15 minimum, all of the following:

16 (1) Identification and assessment of the material

17 risks of its digital asset business activity related to

18 money laundering and financing of terrorist activity.

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

20 guidance published by federal agencies responsible for

21 enforcing federal law, pertaining to money laundering and

22 financing of terrorist activity.

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

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

25 of Federal Regulations and other federal or State law

26 pertaining to the prevention or detection of money

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1 laundering or financing of terrorist activity.

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

3 include, at a minimum, reasonable and appropriate

4 administrative, physical, and technical safeguards to protect

5 the confidentiality, integrity, and availability of any

6 nonpublic information or digital asset it receives, maintains,

7 or transmits.

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

9 at a minimum, all of the following:

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

11 procedures designed to protect the confidentiality,

12 integrity, and availability of the registrant's

13 information systems and nonpublic information stored on

14 those information systems.

15 (B) Implementing and maintaining a written policy or

16 policies, approved at least annually by an executive

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

18 appropriate committee thereof, or an equivalent governing

19 body setting forth the registrant's policies and

20 procedures for the protection of its information systems

21 and nonpublic information stored on those information

22 systems.

23 (C) Designating a qualified individual responsible for

24 overseeing and implementing the registrant's cybersecurity

25 program and enforcing its cybersecurity policy. The

26 individual must have adequate authority to ensure

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1 cybersecurity risks are appropriately managed, including

2 the ability to direct sufficient resources to implement

3 and maintain a cybersecurity program. The individual may

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

5 service provider.

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

7 Department may adopt rules to define terms used in this

8 subsection and to establish specific requirements for the

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

10 rules related to:

11 (A) penetration testing and vulnerability assessment;

12 (B) audit trails;

13 (C) access privileges;

14 (D) application security;

15 (E) risk assessment;

16 (F) cybersecurity personnel and intelligence;

17 (G) affiliates and service providers;

18 (H) authentication;

19 (I) data retention;

20 (J) training and monitoring;

21 (K) encryption;

22 (L) incident response;

23 (M) notice of cybersecurity events; and

24 (N) any other requirement necessary and appropriate

25 for the protection of residents or for the safety and

26 soundness of the registrant or to effectuate the purposes

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1 of this subsection.

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

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

4 state authority.

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

6 Article are created and approved by the registrant, the

7 registrant shall engage a qualified individual or individuals

8 with adequate authority and experience to monitor and

9 implement each policy and procedure, publicize it as

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

11 Article 15. Registration

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

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

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

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

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

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

18 Section 15-10. Application.

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

20 meet all of the following requirements:

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

22 prescribed by the Department. The Department may require

23 the filing of the application through a multistate

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1 licensing system.

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

3 information relevant to the applicant's proposed digital

4 asset business activity:

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

6 or proposed business United States Postal Service

7 address of the applicant, and any fictitious or trade

8 name the applicant uses or plans to use in conducting

9 the applicant's digital asset business activity with

10 or on behalf of a resident.

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

12 and the residential and business United States Postal

13 Service address of any executive officer and

14 responsible individual of the applicant and any person

15 that has control of the applicant.

16 (C) A description of the current and former

17 business of the applicant and any affiliate of the

18 applicant for the 5 years before the application is

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

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

21 including its products and services, associated

22 website addresses and social media pages, principal

23 place of business, projected user base, and specific

24 marketing targets.

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

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

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1 transmitter registration the applicant and any

2 affiliates hold in another state or from an agency

3 of the United States.

4 (ii) The date the registrations described in

5 subdivision (i) expire.

6 (iii) Any revocation, suspension, or other

7 disciplinary action taken against the applicant

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

9 the United States and any applications rejected by

10 any state or agency of the United States.

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

12 prosecution agreement, and pending criminal proceeding

13 in any jurisdiction against all of the following:

14 (i) The applicant.

15 (ii) Any executive officer of the applicant.

16 (iii) Any responsible individual of the

17 applicant.

18 (iv) Any person that has control over the

19 applicant.

20 (v) Any affiliate of the applicant.

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

22 administrative proceeding in any jurisdiction in which

23 the applicant or an executive officer, responsible

24 individual, or affiliate of the applicant has been a

25 party for the 10 years before the application is

26 submitted determined to be material in accordance with

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1 generally accepted accounting principles and, to the

2 extent the applicant or such other person would be

3 required to disclose the litigation, arbitration, or

4 administrative proceeding in the applicant's or such

5 other person's audited financial statements, reports

6 to equity owners, and similar statements or reports.

7 (G) A list of any bankruptcy or receivership

8 proceeding in any jurisdiction for the 10 years before

9 the application is submitted in which any of the

10 following was a debtor:

11 (i) The applicant.

12 (ii) An executive officer of the applicant.

13 (iii) A responsible individual of the

14 applicant.

15 (iv) A person that has control over the

16 applicant.

17 (v) An affiliate of the applicant.

18 (H) The name and United States Postal Service

19 address of any bank or credit union in which the

20 applicant and any affiliates plan to deposit funds

21 obtained by digital asset business activity.

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

23 the applicant and any affiliate to conduct digital

24 asset business activity with or on behalf of a

25 resident.

26 (J) A current financial statement and other

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1 documentation satisfactory to the Department

2 demonstrating that the applicant has the capital and

3 liquidity required by Section 20-5.

4 (K) The United States Postal Service address and

5 email address to which communications from the

6 Department can be sent.

7 (L) The name, United States Postal Service

8 address, and email address of the registered agent of

9 the applicant in this State.

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

11 summary acceptable to the Department, of coverage for

12 any liability, casualty, business interruption, or

13 cybersecurity insurance policy maintained by the

14 applicant for itself, an executive officer, a

15 responsible individual, an affiliate, or the

16 applicant's users.

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

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

19 current certificate of good standing issued by that

20 state.

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

22 the person's equity interests are publicly traded in

23 the United States, a copy of the audited financial

24 statement of the person for the most recent fiscal

25 year or most recent report of the person filed under

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

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1 U.S.C. 78m.

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

3 the person's equity interests are publicly traded

4 outside the United States, a copy of the audited

5 financial statement of the person for the most recent

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

7 documentation similar to that required in subparagraph

8 (N) filed with the foreign regulator in the domicile

9 of the person.

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

11 member-managed limited liability company, the names

12 and United States Postal Service addresses of any

13 general partner or member.

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

15 the Financial Crimes Enforcement Network of the United

16 States Department of the Treasury as a money service

17 business, evidence of the registration.

18 (S) A set of fingerprints for each executive

19 officer and responsible individual of the applicant.

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

21 responsible individual of the applicant, for the 10

22 years before the application is submitted, employment

23 history and history of any investigation of the

24 individual or legal proceeding to which the individual

25 was a party.

26 (U) The plans through which the applicant will

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1 meet its obligations under Article 10.

2 (V) Any other information the Department requires

3 by rule.

4 (3) The application shall be accompanied by a

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

6 the Department to cover the costs of application review,

7 whichever is greater.

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

9 Department shall investigate all of the following:

10 (A) The financial condition and responsibility of the

11 applicant and any affiliate of the applicant.

12 (B) The relevant financial and business experience,

13 character, and general fitness of the applicant and any

14 affiliate of the applicant.

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

16 fitness of each executive officer and director, each

17 responsible individual, and any person that has control of

18 the applicant.

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

20 may investigate the business premises of an applicant or an

21 affiliate of the applicant or require the submission of any

22 other documents or information the Department deems relevant

23 to the application.

24 (3) The investigation required by this subsection must

25 allow the Secretary to issue positive findings stating that

26 the financial condition, financial responsibility, competence,

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

2 each executive officer and director, each responsible

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

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

5 confidence of the community and to warrant belief that the

6 business will be operated honestly, fairly, and efficiently

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

8 find, the Secretary shall not issue the registration, and the

9 Secretary shall notify the applicant of the denial.

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

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

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

13 application. If the Department does not receive notice from

14 the applicant that the applicant accepts conditions specified

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

16 notice of the conditions, the application shall be deemed

17 withdrawn.

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

19 if the Secretary determines that those conditions are

20 necessary or appropriate. These conditions shall be imposed in

21 writing and shall continue in effect for the period prescribed

22 by the Secretary.

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

24 effect on the later of the following:

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

26 (2) The date the registration provides the security

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1 required by Section 20-5.

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

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

4 Department's investigation under subsection (b).

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

6 remain in full force and effect until it expires without

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

8 suspended as hereinafter provided.

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

10 to an applicant who holds or maintains a registration to

11 conduct virtual currency business activity in the State of New

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

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

14 purpose trust company with approval to conduct virtual

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

16 registration or approval was issued no later than the

17 effective date of this Act and the applicant pays all

18 appropriate fees and complies with the requirements of this

19 Act.

20 (2) A conditional registration issued pursuant to this

21 subsection shall expire at the earliest of the following:

22 (A) upon issuance of an unconditional registration;

23 (B) upon denial of a registration;

24 (C) upon revocation of a registration issued pursuant

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

26 Regulations or disapproval or revocation of a charter as a

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1 New York State limited purpose trust company with approval

2 to conduct virtual currency business under the New York

3 Banking Law.

4 Section 15-15. Renewal.

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

6 using a common renewal period as established by the Department

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

8 registration by submitting a renewal application under

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

10 Department.

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

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

13 Department. The application shall contain all of the

14 following:

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

16 reviewed annual financial statement, if the gross revenue

17 generated by the registrant's digital asset business

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

19 the fiscal year ending before the anniversary date of

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

21 the registrant's most recent audited annual financial

22 statement, if the registrant's digital asset business

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

24 for the fiscal year ending before the anniversary date.

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

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

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

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

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

5 measured as of the anniversary date of issuance of its

6 registration under this Act.

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

8 annual financial statement, if the person's gross

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

10 fiscal year measured as of the anniversary date of

11 issuance of its registration under this Act.

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

13 (A) Any material change in the financial condition

14 of the registrant and any affiliate of the registrant.

15 (B) Any material litigation related to the

16 registrant's digital asset business activity and

17 involving the registrant or an executive officer,

18 responsible individual, or affiliate of the

19 registrant.

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

21 involving the registrant or an executive officer,

22 responsible individual, or affiliate of the

23 registrant.

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

25 event involving the registrant.

26 (ii) A description of a data security breach

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1 pursuant to this subparagraph does not constitute

2 disclosure or notification of a security breach

3 for purposes of any other law.

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

5 that the registrant has not reported to the Department.

6 (5) The number of digital asset business activity

7 transactions with or on behalf of residents for the period

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

9 the date the last renewal application was submitted.

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

11 of digital assets in the custody or control of the

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

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

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

15 registrant had custody or control of United States

16 dollar equivalent of digital assets on that date.

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

18 Section 5-10.

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

20 Section 20-5.

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

22 engages in digital asset business activity.

23 (10) Any other information the Department requires by

24 rule.

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

26 Section, the Department may take enforcement actions provided

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

2 suspension or revocation of a registration under this Act for

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

4 otherwise comply with this Section.

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

6 Section does not invalidate a transfer or exchange of digital

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

8 suspension or revocation and does not insulate the registrant

9 from liability under this Act.

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

11 discretion, may extend a period under this Section.

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

13 shall cease digital asset business activities with or on

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

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

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

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

18 symbols or indicia of registration. The registrant shall

19 include a plan for the withdrawal from regulated business,

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

21 comply with the surrender guidelines or requirements of the

22 Department.

23 Section 15-20. Nontransferable registration. A

24 registration under this Act is not transferable or assignable.

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1 Article 20. Supervision

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

3 requirements.

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

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

6 determined by the Department for the protection of residents

7 that engage in digital asset business activity with the

8 registrant.

9 (B) If a registrant maintains a trust account

10 pursuant to this Section, that trust account shall be

11 maintained with a qualified custodian.

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

13 the benefit of a claim against the registrant on account

14 of the registrant's digital asset business activity with

15 or on behalf of a resident.

16 (3) Security deposited under this Section shall cover

17 claims for the period the Department specifies by rule and

18 for an additional period the Department specifies after

19 the registrant ceases to engage in digital asset business

20 activity with or on behalf of a resident.

21 (4) The Department may require the registrant to

22 increase the amount of security deposited under this

23 Section, and the registrant shall deposit the additional

24 security not later than 15 days after the registrant

25 receives notice in a record of the required increase.

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1 (5) The Department may permit a registrant to

2 substitute or deposit an alternate form of security

3 satisfactory to the Department if the registrant at all

4 times complies with this Section.

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

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

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

8 determines is sufficient to ensure the financial integrity of

9 the registrant and its ongoing operations based on an

10 assessment of the specific risks applicable to the registrant.

11 In determining the minimum amount of capital and liquidity

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

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

14 following:

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

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

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

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

19 liabilities, including the size and repayment timing of

20 each type of liability.

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

22 digital asset business activity.

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

24 (5) The liquidity position of the registrant.

25 (6) The financial protection that the registrant

26 provides pursuant to subsection (a).

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

2 registrant.

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

4 the registrant.

5 (9) Arrangements adopted by the registrant for the

6 protection of its customers in the event of the

7 registrant's insolvency.

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

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

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

11 and in proportions determined by the Department.

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

13 the capital or liquidity required under this Section. A

14 registrant shall submit evidence satisfactory to the

15 Department that it has additional capital or liquidity

16 required pursuant to this subsection not later than 15 days

17 after the registrant receives notice in a record of the

18 required increase.

19 Section 20-10. Examination.

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

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

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

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

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

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

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

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

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

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

5 activities of the covered person outside the State, if in the

6 Department's judgment, such activities may affect the covered

7 person's digital asset business activity.

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

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

10 examined by the Department shall exhibit to the

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

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

13 papers, and other records and shall otherwise

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

15 power to do so.

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

17 Department to examine an affiliate or service provider

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

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

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

21 affiliate, or service provider pursuant to this paragraph

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

23 service provider.

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

25 examination under this Section.

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1 Section 20-15. Books and records.

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

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

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

5 following:

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

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

8 this State, including all of the following:

9 (A) The identity of the resident.

10 (B) The form of the transaction.

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

12 given by the resident.

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

14 of:

15 (i) the parties to the transaction that are

16 customers or account holders of the registrant;

17 and

18 (ii) to the extent practicable, any other

19 parties to the transaction.

20 (2) The aggregate number of transactions and aggregate

21 value of transactions by the registrant with or on behalf

22 of the resident and for the registrant's account in this

23 State expressed in United States dollar equivalent of

24 digital assets for the previous 12 calendar months.

25 (3) Any transaction in which the registrant exchanged

26 one form of digital asset for fiat currency or another

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

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

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

4 expenses of the registrant.

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

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

7 Department may request.

8 (6) Bank statements and bank reconciliation records

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

10 United States Postal Service address of any bank or credit

11 union the registrant uses in the conduct of its digital

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

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

14 (b) A registrant shall maintain records required by

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

16 determine whether the registrant is in compliance with this

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

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

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

20 the registrant shall make the records available to the

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

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

23 discretion, at a later time.

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

25 or any service provider are subject to inspection by the

26 Department.

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

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

3 records and other information with the appropriate regulatory

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

5 federal or state regulator of banking or non-depository

6 institutions, or a regulator of a jurisdiction outside the

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

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

9 Section 20-25. Material business changes.

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

11 of the following, as may be applicable:

12 (1) A material change in information in the

13 application for a registration under this Act or the most

14 recent renewal report of the registrant under this Act.

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

16 the conduct of its digital asset business activity with or

17 on behalf of a resident.

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

19 responsible individual, or person in control of the

20 registrant.

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

22 later than 15 days after the change described in subsection

23 (a).

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1 Section 20-30. Change in control.

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

3 control" means the person that would control a registrant

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

5 control of the registrant.

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

7 person has control over a registrant:

8 (1) A person has control over a registrant if a person

9 directly or indirectly owns, controls, holds with the

10 power to vote, or holds proxies representing, 10% or more

11 of the then outstanding voting securities issued by the

12 registrant.

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

14 person's voting power in the registrant constitutes or

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

16 the registrant.

17 (3) A person has control over a registrant if the

18 person's voting power in another person constitutes or

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

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

21 the registrant constitutes at least 10% of the total

22 voting power of the registrant.

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

24 an individual is an executive officer of the registrant.

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

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

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1 Department in a record all of the following:

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

3 the Department.

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

5 would require if the proposed person to be in control

6 already had control of the registrant.

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

8 the Secretary finds all of the following:

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

10 executive officers of the proposed person to be in

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

12 standing.

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

14 to engage in digital asset business activity.

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

16 acquires control of the registrant, the proposed person to

17 be in control and the registrant will comply with all

18 applicable provisions of this Act and any rules or order

19 issued under this Act.

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

21 to change the business, corporate structure, or management

22 of the registrant are not detrimental to the safety and

23 soundness of the registrant.

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

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

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

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

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

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

4 application, the registrant shall abandon the proposed change

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

6 behalf of residents.

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

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

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

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

11 Department sends notice of the condition, the application is

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

13 registrant shall abandon the proposed change in control or

14 cease digital asset business activity with or on behalf of

15 residents.

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

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

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

19 consistent with this Act.

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

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

22 other agency conflicts with that of the Department, the

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

24 change in control cannot be completed because the conflict

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

26 control or cease digital asset business activity with or on

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1 behalf of residents.

2 Section 20-35. Mergers.

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

4 registrant with another person, the registrant shall submit

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

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

7 the Department.

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

9 with subsection (e).

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

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

12 be the surviving entity in the proposed merger or

13 consolidation.

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

15 control of a registrant, the registrant shall comply with

16 Section 20-30 and this Section.

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

18 shall approve, conditionally approve, or deny an application

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

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

21 the registrant and the person that would be the surviving

22 entity. If the Department denies the application, the

23 registrant shall abandon the merger or consolidation or cease

24 digital asset business activity with or on behalf of

25 residents.

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

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

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

4 with this Act.

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

6 another person shall do all of the following:

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

8 the registrant's conduct of digital asset business

9 activity with or on behalf of residents.

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

11 and the person that would be the surviving entity.

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

13 consolidation and the mode of carrying it into effect.

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

15 another person requires approval of another regulatory agency,

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

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

18 If the proposed merger or consolidation cannot be completed

19 because the conflict cannot be resolved, the registrant shall

20 abandon the merger or consolidation or cease digital asset

21 business activity with or on behalf of residents.

22 (g) The Department may condition approval of an

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

24 receive notice from the parties that the parties accept the

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

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

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1 application is deemed denied. If the application is deemed

2 denied, the registrant shall abandon the merger or

3 consolidation or cease digital asset business activity with,

4 or on behalf of, residents.

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

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

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

8 this Section.

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

10 shall be authorized at all times to maintain staff and

11 facilities adequate to receive, record, and investigate

12 complaints and inquiries made by any person concerning this

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

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

15 records, documents, and offices wherever situated to the

16 Secretary or his or her appointees as needed to facilitate

17 such investigations.

18 Section 20-45. Additional investigation and examination

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

20 or other applicable law, the Secretary shall have the

21 authority to conduct investigations and examinations as

22 follows:

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

24 suspension, conditioning, revocation or termination, or

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1 general or specific inquiry or investigation to determine

2 compliance with this Act, the Secretary shall have the

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

4 records, files, documents, information, or evidence,

5 including, but not limited to, the following:

6 (A) criminal, civil, and administrative history

7 information, including nonconviction data as specified

8 in the Criminal Code of 2012;

9 (B) personal history and experience information,

10 including independent credit reports obtained from a

11 consumer reporting agency described in Section 603(p)

12 of the federal Fair Credit Reporting Act; and

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

14 the Secretary deems relevant to the inquiry or

15 investigation, regardless of the location, possession,

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

17 evidence.

18 (2) For the purposes of investigating violations or

19 complaints arising under this Act or for the purposes of

20 examination, the Secretary may review, investigate, or

21 examine any covered person, affiliate, service provider,

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

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

24 The Secretary may direct, subpoena, or order the

25 attendance of and examine under oath all persons whose

26 testimony may be required about the transactions or the

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1 business or subject matter of any such examination or

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

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

4 other documents the Secretary deems relevant to the

5 inquiry.

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

7 individual, or person subject to this Act shall make

8 available to the Secretary upon request the books and

9 records relating to the operations of the registrant,

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

11 Secretary shall have access to those books and records and

12 interview the officers, principals, employees, independent

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

14 affiliate, service provider, individual, or person subject

15 to this Act concerning their business.

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

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

18 compile reports or prepare other information as directed

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

20 Section, including, but not limited to:

21 (A) accounting compilations;

22 (B) information lists and data concerning

23 transactions in a format prescribed by the Secretary;

24 or

25 (C) other information deemed necessary to carry

26 out the purposes of this Section.

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1 (5) In making any examination or investigation

2 authorized by this Act, the Secretary may control access

3 to any documents and records of the covered person or

4 person under examination or investigation. The Secretary

5 may take possession of the documents and records or place

6 a person in exclusive charge of the documents and records

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

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

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

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

11 the Secretary has reasonable grounds to believe the

12 documents or records of the covered person or person under

13 examination or investigation have been or are at risk of

14 being altered or destroyed for purposes of concealing a

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

16 documents and records shall have access to the documents

17 or records as necessary to conduct its ordinary business

18 affairs.

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

20 Section, the Secretary may:

21 (A) retain attorneys, accountants, or other

22 professionals and specialists as examiners, auditors,

23 or investigators to conduct or assist in the conduct

24 of examinations or investigations;

25 (B) enter into agreements or relationships with

26 other government officials, regulatory associations,

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1 or self-regulatory organizations in order to improve

2 efficiencies and reduce regulatory burden by sharing

3 resources, standardized or uniform methods or

4 procedures, and documents, records, information, or

5 evidence obtained under this Section;

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

7 privately available analytical systems, methods, or

8 software to examine or investigate the covered person,

9 affiliate, service provider, individual, or person

10 subject to this Act;

11 (D) accept and rely on examination or

12 investigation reports made by other government

13 officials, within or outside this State; or

14 (E) accept audit reports made by an independent

15 certified public accountant for the covered person,

16 affiliate, service provider, individual, or person

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

18 examination covering the same general subject matter

19 as the audit and may incorporate the audit report in

20 the report of the examination, report of

21 investigation, or other writing of the Secretary.

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

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

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

25 or claims to act under any licensing or registration law

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

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

2 individual, or person subject to investigation or

3 examination under this Section may knowingly withhold,

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

5 records, computer records, or other information.

6 Section 20-50. Enforcement actions.

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

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

9 (1) Suspending or revoking a registration under this

10 Act.

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

12 digital asset business activity with or on behalf of a

13 resident.

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

15 assets of a person doing digital asset business activity

16 with or on behalf of a resident.

17 (4) Requesting the court to issue temporary,

18 preliminary, or permanent injunctive relief against a

19 person doing digital asset business activity with or on

20 behalf of a resident.

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

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

23 initiating a plan to distribute the proceeds for the

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

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

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1 digital asset business activity with or on behalf of a

2 resident.

3 (7) Imposing necessary or appropriate conditions on

4 the conduct of digital asset business activity with or on

5 behalf of a resident.

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

7 Department shows economic injury due to a violation of

8 this Act.

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

10 person regarding an enforcement action.

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

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

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

14 subsection (a) of Section 20-5.

15 Section 20-55. Violations.

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

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

18 any of the following instances:

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

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

21 federal law or regulation that applies to digital asset

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

23 resident.

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

25 with an examination or investigation by the Department,

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

2 documentation.

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

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

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

6 in any of the following:

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

8 practice.

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

10 practice.

11 (C) Fraud, misrepresentation, deceit, or

12 negligence.

13 (D) Misappropriation of fiat currency, a digital

14 asset, or other value.

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

16 takes an action against the covered person or person that

17 would constitute an enforcement action if the Department

18 had taken the action.

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

20 crime related to its digital asset business activity with

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

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

23 covered person or person unsuitable to engage in digital

24 asset business activity.

25 (6) Any of the following occurs:

26 (A) The covered person or person becomes

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1 insolvent.

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

3 assignment for the benefit of its creditors.

4 (C) The covered person or person becomes the

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

6 similar capacity in a case or other proceeding under

7 any bankruptcy, reorganization, arrangement,

8 readjustment, insolvency, receivership, dissolution,

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

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

11 plan or dismissal of the case or proceeding.

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

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

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

15 part of its assets.

16 (7) The covered person or person makes a

17 misrepresentation to the Department.

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

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

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

21 conducted in accordance with this Act, the Secretary may

22 notify the registrant of the correction necessary. If a

23 registrant fails to correct such violations, the Secretary may

24 issue an order requiring immediate correction and compliance

25 with this Act and may specify a reasonable date for

26 performance.

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1 Section 20-60. Hearings.

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

3 may take an enforcement action only after notice and

4 opportunity for a hearing as appropriate in the circumstances.

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

6 accordance with Title 38, Part 100 of the Illinois

7 Administrative Code, and the Secretary shall have all the

8 powers granted therein.

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

10 other than the imposition of a civil penalty under Section

11 20-70, without notice if the circumstances require action

12 before notice can be given.

13 (B) A person subject to an enforcement action

14 pursuant to this subsection shall have the right to an

15 expedited post-action hearing by the Department unless

16 the person has waived the hearing.

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

18 other than the imposition of a civil penalty under Section

19 20-70, after notice and without a prior hearing if the

20 circumstances require action before a hearing can be held.

21 (B) A person subject to an enforcement action

22 pursuant to this subsection shall have the right to an

23 expedited post-action hearing by the Department unless

24 the person has waived the hearing.

25 (3) The Department may take an enforcement action

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1 after notice and without a hearing if the person subject

2 to the enforcement action does not timely request a

3 hearing.

4 Section 20-65. Hearing rules.

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

6 Administrative Procedure Act, adopt rules to provide for

7 review within the Department of the Secretary's decisions

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

9 The review shall provide for, at a minimum:

10 (1) appointment of a hearing officer;

11 (2) appropriate procedural rules, specific deadlines

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

13 (3) provision for apportioning costs among parties to

14 the appeal.

15 (b) All final administrative decisions of the Department

16 under this Act, all amendments and modifications of final

17 administrative decisions, and any rules adopted by the

18 Department pursuant to this Act shall be subject to judicial

19 review pursuant to the provisions of the Administrative Review

20 Law.

21 Section 20-70. Civil penalties.

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

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

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

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

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

3 person is in violation of this Act.

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

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

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

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

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

9 omission in violation related to fraud, misrepresentation,

10 deceit, or negligence.

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

12 until the date the violation ceases.

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

14 any civil penalties enforceable by the Department under any

15 other law.

16 Section 20-75. Subpoena power.

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

18 serve subpoenas and subpoenas duces tecum to compel the

19 attendance of witnesses and the production of all books,

20 accounts, records, and other documents and materials relevant

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

22 her duly authorized representative, shall have power to

23 administer oaths and affirmations to any person.

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

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

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

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

3 subpoenaed resides or has its principal place of business,

4 petition the circuit court of the county for an order

5 requiring the subpoenaed person to appear and testify and to

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

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

8 injunctive relief restraining the person from advertising,

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

10 continuing, or completing any digital asset business activity.

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

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

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

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

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

16 or other documents and materials as the court deems

17 appropriate, until the person has fully complied with the

18 subpoena or subpoena duces tecum and the Secretary has

19 completed an investigation or examination.

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

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

22 issued by the Secretary pursuant to this Section is essential

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

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

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

26 which the subpoenaed person resides or has its principal place

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

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

3 order against the subpoenaed person requiring sufficient bond

4 conditioned on compliance with the subpoena or subpoena duces

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

6 suitable amount of bond or payment pursuant to which the

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

8 to the nature of the case.

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

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

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

12 court having jurisdiction over the person who has refused to

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

14 refused to produce the matters described in the subpoena duces

15 tecum.

16 Section 20-80. Civil actions.

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

18 with the following:

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

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

21 the Department, the Department through the Attorney

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

23 such violation occurs may bring an action in the circuit

24 court to enjoin the acts or practices or to enforce

25 compliance with this Act or any rule or order adopted

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

2 or preliminary injunction, restraining order, or writ of

3 mandate shall be granted and a receiver, monitor,

4 conservator, or other designated fiduciary or officer of

5 the court may be appointed for the defendant or the

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

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

8 or other designated fiduciary or officer of the court

9 appointed by the circuit court pursuant to this Section

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

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

12 partners, trustees, or persons who exercise similar powers

13 and perform similar duties, including the filing of a

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

15 be maintained by any party against the Secretary, a

16 receiver, monitor, conservator, or other designated

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

18 exercising these powers or performing these duties

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

20 circuit court.

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

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

23 jurisdiction to award additional relief.

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

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

26 connection with prosecuting the action if the Department

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1 is the prevailing party in the action.

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

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

4 Deceptive Business Practices Act.

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

6 civil action. Additionally, a prevailing resident may be

7 awarded reasonable attorney's fees and court costs.

8 Article 30. Additional Procedural Provisions

9 Section 30-5. Confidential supervisory information.

10 (a) Confidential supervisory information shall, unless

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

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

13 subject to disclosure pursuant to subpoena or court order as

14 provided in subsection (e).

15 (b) All records of communications or summaries of

16 communications between employees, agents, or representatives

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

18 other governmental agencies, a provider of any multistate

19 licensing system, or associations or organizations

20 representing federal, state, or local law enforcement or

21 regulatory agencies or providers of any multistate licensing

22 system, pursuant to any regulatory or supervision activity

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

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

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1 contain confidential supervisory information, shall only be

2 subject to disclosure pursuant to subpoena or court order as

3 provided in subsection (e).

4 (c) All confidential supervisory information received from

5 other governmental agencies, a multistate licensing system

6 provider, or associations or organizations consisting of

7 employees, agents, or representatives of such agencies or

8 providers, shall not be subject to disclosure under the

9 Freedom of Information Act, and only subject to disclosure

10 pursuant to subpoena or court order as provided in subsection

11 (e).

12 (d) The sharing of any confidential supervisory

13 information under this Act with governmental agencies,

14 providers of any multistate licensing system, or associations

15 or organizations consisting of employees, agents, or

16 representatives of such federal, state, or local law

17 enforcement or regulatory agencies, shall not result in the

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

19 loss of confidentiality protections provided by federal law or

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

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

22 (e) Confidential supervisory information may not be

23 disclosed to anyone other than the regulated person, law

24 enforcement officials or other regulatory agencies that have

25 an appropriate regulatory interest as determined by the

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

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1 or other judicial or administrative process to the Secretary.

2 The Secretary may immediately appeal to the court of

3 jurisdiction the disclosure of such confidential supervisory

4 information and seek a stay of the subpoena pending the

5 outcome of the appeal. Reports required of regulated persons

6 by the Secretary under this Act and results of examinations

7 performed by the Secretary under this Act shall be the

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

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

10 records of each regulated person shall be limited to the

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

12 regulated person and its authorized agents and designees. No

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

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

15 for production of confidential supervisory information is

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

17 administrative process, must withhold production of the

18 confidential supervisory information and must notify the

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

20 authorized to intervene for the purpose of enforcing the

21 limitations of this Section or seeking the withdrawal or

22 termination of the attempt to compel production of the

23 confidential supervisory information. The Secretary may impose

24 any conditions and limitations on the disclosure of

25 confidential supervisory information that are necessary to

26 protect the confidentiality of such information. Except as

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1 authorized by the Secretary, no person obtaining access to

2 confidential supervisory information may make a copy of the

3 confidential supervisory information. The Secretary may

4 condition a decision to disclose confidential supervisory

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

6 administrative tribunal presiding in the particular case or on

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

8 protective order or agreement has already been entered between

9 parties other than the Secretary, the Secretary may

10 nevertheless condition approval for release of confidential

11 supervisory information upon the inclusion of additional or

12 amended provisions in the protective order. The Secretary may

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

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

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

16 parties. The requester shall promptly notify other parties to

17 a case of the release of confidential supervisory information

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

19 copies of confidential supervisory information to the other

20 parties.

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

22 sharing arrangements with other governmental agencies,

23 providers of any multistate licensing system, or associations

24 or organizations representing governmental agencies or

25 providers of any multistate licensing system. Notwithstanding

26 the foregoing, the provisions of this Section shall apply

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1 regardless of the existence of any such agreement or sharing

2 arrangement.

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

4 authority that the Department has pursuant to any other

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

6 privilege arising under federal or state law or other

7 exemption from disclosure pursuant to the Freedom of

8 Information Act.

9 (h) Notwithstanding the foregoing, whenever the Secretary

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

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

12 or documents obtained under this Act, unless otherwise

13 prohibited by law.

14 Section 30-10. Additional rulemaking authority.

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

16 may be prescribed elsewhere in this Act or other financial

17 laws administered by the Department, the Department is hereby

18 authorized and empowered to adopt rules consistent with the

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

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

21 persons, affiliates, and service providers as may be

22 necessary and appropriate for the protection of residents;

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

24 may be necessary and appropriate to interpret and

25 implement the provisions of this Act;

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

2 and enforcement of this Act;

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

4 administer and enforce this Act;

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

6 persons, affiliates, and service providers as may be

7 necessary and appropriate for the safety and soundness of

8 such covered persons and affiliates and the stability of

9 the financial system in this State.

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

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

12 deems necessary for the proper conduct of the registrants and

13 affiliates thereof.

14 Article 35. Miscellaneous Provisions

15 Section 35-5. No evasion.

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

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

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

19 Department hereunder.

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

21 willfully structured to evade or attempt to evade the

22 definitions of digital asset or digital asset business

23 activity is a digital asset or digital asset business

24 activity, respectively, for purposes of this Act.

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1 Section 35-10. Construction; severability.

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

3 construed to effectuate its purposes.

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

5 1.31 of the Statute on Statutes.

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

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

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

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

10 Section 35-15. Transition period.

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

12 activity without a registration under this Act shall not be

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

14 2027.

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

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

17 5-10, and 5-20 until January 1, 2027.

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

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

20 (d) Notwithstanding the foregoing, the Department may

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

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

23 2026.

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1 Article 90. Amendatory provisions

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

3 changing Section 7.5 as follows:

4 (5 ILCS 140/7.5)

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

6 by the statutes referenced below, the following shall be

7 exempt from inspection and copying:

8 (a) All information determined to be confidential

9 under Section 4002 of the Technology Advancement and

10 Development Act.

11 (b) Library circulation and order records identifying

12 library users with specific materials under the Library

13 Records Confidentiality Act.

14 (c) Applications, related documents, and medical

15 records received by the Experimental Organ Transplantation

16 Procedures Board and any and all documents or other

17 records prepared by the Experimental Organ Transplantation

18 Procedures Board or its staff relating to applications it

19 has received.

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

21 Public Health and its authorized representatives relating

22 to known or suspected cases of sexually transmitted

23 infection or any information the disclosure of which is

24 restricted under the Illinois Sexually Transmitted

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1 Infection Control Act.

2 (e) Information the disclosure of which is exempted

3 under Section 30 of the Radon Industry Licensing Act.

4 (f) Firm performance evaluations under Section 55 of

5 the Architectural, Engineering, and Land Surveying

6 Qualifications Based Selection Act.

7 (g) Information the disclosure of which is restricted

8 and exempted under Section 50 of the Illinois Prepaid

9 Tuition Act.

10 (h) Information the disclosure of which is exempted

11 under the State Officials and Employees Ethics Act, and

12 records of any lawfully created State or local inspector

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

14 obtained by an Executive Inspector General's office under

15 that Act.

16 (i) Information contained in a local emergency energy

17 plan submitted to a municipality in accordance with a

18 local emergency energy plan ordinance that is adopted

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

20 (j) Information and data concerning the distribution

21 of surcharge moneys collected and remitted by carriers

22 under the Emergency Telephone System Act.

23 (k) Law enforcement officer identification information

24 or driver identification information compiled by a law

25 enforcement agency or the Department of Transportation

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

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1 (l) Records and information provided to a residential

2 health care facility resident sexual assault and death

3 review team or the Executive Council under the Abuse

4 Prevention Review Team Act.

5 (m) Information provided to the predatory lending

6 database created pursuant to Article 3 of the Residential

7 Real Property Disclosure Act, except to the extent

8 authorized under that Article.

9 (n) Defense budgets and petitions for certification of

10 compensation and expenses for court appointed trial

11 counsel as provided under Sections 10 and 15 of the

12 Capital Crimes Litigation Act (repealed). This subsection

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

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

15 death penalty prior to trial or sentencing.

16 (o) Information that is prohibited from being

17 disclosed under Section 4 of the Illinois Health and

18 Hazardous Substances Registry Act.

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

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

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

22 Department of Transportation under Sections 2705-300 and

23 2705-616 of the Department of Transportation Law of the

24 Civil Administrative Code of Illinois, the Regional

25 Transportation Authority under Section 2.11 of the

26 Regional Transportation Authority Act, or the St. Clair

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1 County Transit District under the Bi-State Transit Safety

2 Act (repealed).

3 (q) Information prohibited from being disclosed by the

4 Personnel Record Review Act.

5 (r) Information prohibited from being disclosed by the

6 Illinois School Student Records Act.

7 (s) Information the disclosure of which is restricted

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

9 (t) (Blank).

10 (u) Records and information provided to an independent

11 team of experts under the Developmental Disability and

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

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

14 for or received Firearm Owner's Identification Cards under

15 the Firearm Owners Identification Card Act or applied for

16 or received a concealed carry license under the Firearm

17 Concealed Carry Act, unless otherwise authorized by the

18 Firearm Concealed Carry Act; and databases under the

19 Firearm Concealed Carry Act, records of the Concealed

20 Carry Licensing Review Board under the Firearm Concealed

21 Carry Act, and law enforcement agency objections under the

22 Firearm Concealed Carry Act.

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

24 Card Review Board that are exempted from disclosure under

25 Section 10 of the Firearm Owners Identification Card Act.

26 (w) Personally identifiable information which is

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1 exempted from disclosure under subsection (g) of Section

2 19.1 of the Toll Highway Act.

3 (x) Information which is exempted from disclosure

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

5 8-11-21 of the Illinois Municipal Code.

6 (y) Confidential information under the Adult

7 Protective Services Act and its predecessor enabling

8 statute, the Elder Abuse and Neglect Act, including

9 information about the identity and administrative finding

10 against any caregiver of a verified and substantiated

11 decision of abuse, neglect, or financial exploitation of

12 an eligible adult maintained in the Registry established

13 under Section 7.5 of the Adult Protective Services Act.

14 (z) Records and information provided to a fatality

15 review team or the Illinois Fatality Review Team Advisory

16 Council under Section 15 of the Adult Protective Services

17 Act.

18 (aa) Information which is exempted from disclosure

19 under Section 2.37 of the Wildlife Code.

20 (bb) Information which is or was prohibited from

21 disclosure by the Juvenile Court Act of 1987.

22 (cc) Recordings made under the Law Enforcement

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

24 authorized under that Act.

25 (dd) Information that is prohibited from being

26 disclosed under Section 45 of the Condominium and Common

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1 Interest Community Ombudsperson Act.

2 (ee) Information that is exempted from disclosure

3 under Section 30.1 of the Pharmacy Practice Act.

4 (ff) Information that is exempted from disclosure

5 under the Revised Uniform Unclaimed Property Act.

6 (gg) Information that is prohibited from being

7 disclosed under Section 7-603.5 of the Illinois Vehicle

8 Code.

9 (hh) Records that are exempt from disclosure under

10 Section 1A-16.7 of the Election Code.

11 (ii) Information which is exempted from disclosure

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

13 the Civil Administrative Code of Illinois.

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

15 submitted to the Department of Labor by registering day

16 and temporary labor service agencies but are exempt from

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

18 and Temporary Labor Services Act.

19 (kk) Information prohibited from disclosure under the

20 Seizure and Forfeiture Reporting Act.

21 (ll) Information the disclosure of which is restricted

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

23 Aid Code.

24 (mm) Records that are exempt from disclosure under

25 Section 4.2 of the Crime Victims Compensation Act.

26 (nn) Information that is exempt from disclosure under

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1 Section 70 of the Higher Education Student Assistance Act.

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

3 arising out of a peer support counseling session

4 prohibited from disclosure under the First Responders

5 Suicide Prevention Act.

6 (pp) Names and all identifying information relating to

7 an employee of an emergency services provider or law

8 enforcement agency under the First Responders Suicide

9 Prevention Act.

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

11 Public Health and its authorized representatives collected

12 under the Reproductive Health Act.

13 (rr) Information that is exempt from disclosure under

14 the Cannabis Regulation and Tax Act.

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

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

17 Human Rights Act.

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

19 Center Act, except to the extent authorized under that

20 Act.

21 (uu) Information that is exempt from disclosure under

22 Section 50 of the Sexual Assault Evidence Submission Act.

23 (vv) Information that is exempt from disclosure under

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

25 Public Aid Code.

26 (ww) Information that is exempt from disclosure under

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1 Section 16.8 of the State Treasurer Act.

2 (xx) Information that is exempt from disclosure or

3 information that shall not be made public under the

4 Illinois Insurance Code.

5 (yy) Information prohibited from being disclosed under

6 the Illinois Educational Labor Relations Act.

7 (zz) Information prohibited from being disclosed under

8 the Illinois Public Labor Relations Act.

9 (aaa) Information prohibited from being disclosed

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

11 (bbb) Information that is prohibited from disclosure

12 by the Illinois Police Training Act and the Illinois State

13 Police Act.

14 (ccc) Records exempt from disclosure under Section

15 2605-304 of the Illinois State Police Law of the Civil

16 Administrative Code of Illinois.

17 (ddd) Information prohibited from being disclosed

18 under Section 35 of the Address Confidentiality for

19 Victims of Domestic Violence, Sexual Assault, Human

20 Trafficking, or Stalking Act.

21 (eee) Information prohibited from being disclosed

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

23 Violence Fatality Review Act.

24 (fff) Images from cameras under the Expressway Camera

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

26 July 1, 2025.

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1 (ggg) Information prohibited from disclosure under

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

3 Agency Licensing Act.

4 (hhh) Information submitted to the Illinois State

5 Police in an affidavit or application for an assault

6 weapon endorsement, assault weapon attachment endorsement,

7 .50 caliber rifle endorsement, or .50 caliber cartridge

8 endorsement under the Firearm Owners Identification Card

9 Act.

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

11 the School Safety Drill Act.

12 (jjj) Information exempt from disclosure under Section

13 30 of the Insurance Data Security Law.

14 (kkk) Confidential business information prohibited

15 from disclosure under Section 45 of the Paint Stewardship

16 Act.

17 (lll) Data exempt from disclosure under Section

18 2-3.196 of the School Code.

19 (mmm) Information prohibited from being disclosed

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

21 Power Agency Act.

22 (nnn) Materials received by the Department of Commerce

23 and Economic Opportunity that are confidential under the

24 Music and Musicians Tax Credit and Jobs Act.

25 (ooo) ~~(nnn)~~ Data or information provided pursuant to

26 Section 20 of the Statewide Recycling Needs and Assessment

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1 Act.

2 (ppp) ~~(nnn)~~ Information that is exempt from disclosure

3 under Section 28-11 of the Lawful Health Care Activity

4 Act.

5 (qqq) ~~(nnn)~~ Information that is exempt from disclosure

6 under Section 7-101 of the Illinois Human Rights Act.

7 (rrr) ~~(mmm)~~ Information prohibited from being

8 disclosed under Section 4-2 of the Uniform Money

9 Transmission Modernization Act.

10 (sss) ~~(nnn)~~ Information exempt from disclosure under

11 Section 40 of the Student-Athlete Endorsement Rights Act.

12 (ttt) Data exempt from disclosure under Section 50 of

13 the School Safety Drill Act.

14 (uuu) Information prohibited from being disclosed

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

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

17 102-292, eff. 1-1-22; 102-520, eff. 8-20-21; 102-559, eff.

18 8-20-21; 102-813, eff. 5-13-22; 102-946, eff. 7-1-22;

19 102-1042, eff. 6-3-22; 102-1116, eff. 1-10-23; 103-8, eff.

20 6-7-23; 103-34, eff. 6-9-23; 103-142, eff. 1-1-24; 103-372,

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

22 103-580, eff. 12-8-23; 103-592, eff. 6-7-24; 103-605, eff.

23 7-1-24; 103-636, eff. 7-1-24; 103-724, eff. 1-1-25; 103-786,

24 eff. 8-7-24; 103-859, eff. 8-9-24; 103-991, eff. 8-9-24;

25 103-1049, eff. 8-9-24; revised 11-26-24.)

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1 Section 90-10. The State Finance Act is amended by adding

2 Section 5.1030 as follows:

3 (30 ILCS 105/5.1030 new)

4 Sec. 5.1030. The Consumer Protection Fund.

5 Section 90-15. The Illinois Banking Act is amended by

6 changing Sections 2 and 30 as follows:

7 (205 ILCS 5/2) (from Ch. 17, par. 302)

8 Sec. 2. General definitions. In this Act, unless the

9 context otherwise requires, the following words and phrases

10 shall have the following meanings:

11 "Accommodation party" shall have the meaning ascribed to

12 that term in Section 3-419 of the Uniform Commercial Code.

13 "Action" in the sense of a judicial proceeding includes

14 recoupments, counterclaims, set-off, and any other proceeding

15 in which rights are determined.

16 "Affiliate facility" of a bank means a main banking

17 premises or branch of another commonly owned bank. The main

18 banking premises or any branch of a bank may be an "affiliate

19 facility" with respect to one or more other commonly owned

20 banks.

21 "Appropriate federal banking agency" means the Federal

22 Deposit Insurance Corporation, the Federal Reserve Bank of

23 Chicago, or the Federal Reserve Bank of St. Louis, as

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1 determined by federal law.

2 "Bank" means any person doing a banking business whether

3 subject to the laws of this or any other jurisdiction.

4 A "banking house", "branch", "branch bank", or "branch

5 office" shall mean any place of business of a bank at which

6 deposits are received, checks paid, or loans made, but shall

7 not include any place at which only records thereof are made,

8 posted, or kept. A place of business at which deposits are

9 received, checks paid, or loans made shall not be deemed to be

10 a branch, branch bank, or branch office if the place of

11 business is adjacent to and connected with the main banking

12 premises, or if it is separated from the main banking premises

13 by not more than an alley; provided always that (i) if the

14 place of business is separated by an alley from the main

15 banking premises there is a connection between the two by

16 public or private way or by subterranean or overhead passage,

17 and (ii) if the place of business is in a building not wholly

18 occupied by the bank, the place of business shall not be within

19 any office or room in which any other business or service of

20 any kind or nature other than the business of the bank is

21 conducted or carried on. A place of business at which deposits

22 are received, checks paid, or loans made shall not be deemed to

23 be a branch, branch bank, or branch office (i) of any bank if

24 the place is a terminal established and maintained in

25 accordance with paragraph (17) of Section 5 of this Act, or

26 (ii) of a commonly owned bank by virtue of transactions

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1 conducted at that place on behalf of the other commonly owned

2 bank under paragraph (23) of Section 5 of this Act if the place

3 is an affiliate facility with respect to the other bank.

4 "Branch of an out-of-state bank" means a branch

5 established or maintained in Illinois by an out-of-state bank

6 as a result of a merger between an Illinois bank and the

7 out-of-state bank that occurs on or after May 31, 1997, or any

8 branch established by the out-of-state bank following the

9 merger.

10 "Bylaws" means the bylaws of a bank that are adopted by the

11 bank's board of directors or shareholders for the regulation

12 and management of the bank's affairs. If the bank operates as a

13 limited liability company, however, "bylaws" means the

14 operating agreement of the bank.

15 "Call report fee" means the fee to be paid to the

16 Commissioner by each State bank pursuant to paragraph (a) of

17 subsection (3) of Section 48 of this Act.

18 "Capital" includes the aggregate of outstanding capital

19 stock and preferred stock.

20 "Cash flow reserve account" means the account within the

21 books and records of the Commissioner of Banks and Real Estate

22 used to record funds designated to maintain a reasonable Bank

23 and Trust Company Fund operating balance to meet agency

24 obligations on a timely basis.

25 "Charter" includes the original charter and all amendments

26 thereto and articles of merger or consolidation.

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1 "Commissioner" means the Commissioner of Banks and Real

2 Estate, except that beginning on April 6, 2009 (the effective

3 date of Public Act 95-1047), all references in this Act to the

4 Commissioner of Banks and Real Estate are deemed, in

5 appropriate contexts, to be references to the Secretary of

6 Financial and Professional Regulation.

7 "Commonly owned banks" means 2 or more banks that each

8 qualify as a bank subsidiary of the same bank holding company

9 pursuant to Section 18 of the Federal Deposit Insurance Act;

10 "commonly owned bank" refers to one of a group of commonly

11 owned banks but only with respect to one or more of the other

12 banks in the same group.

13 "Community" means a city, village, or incorporated town

14 and also includes the area served by the banking offices of a

15 bank, but need not be limited or expanded to conform to the

16 geographic boundaries of units of local government.

17 "Company" means a corporation, limited liability company,

18 partnership, business trust, association, or similar

19 organization and, unless specifically excluded, includes a

20 "State bank" and a "bank".

21 "Consolidating bank" means a party to a consolidation.

22 "Consolidation" takes place when 2 or more banks, or a

23 trust company and a bank, are extinguished and by the same

24 process a new bank is created, taking over the assets and

25 assuming the liabilities of the banks or trust company passing

26 out of existence.

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1 "Continuing bank" means a merging bank, the charter of

2 which becomes the charter of the resulting bank.

3 "Converting bank" means a State bank converting to become

4 a national bank, or a national bank converting to become a

5 State bank.

6 "Converting trust company" means a trust company

7 converting to become a State bank.

8 "Court" means a court of competent jurisdiction.

9 "Director" means a member of the board of directors of a

10 bank. In the case of a manager-managed limited liability

11 company, however, "director" means a manager of the bank and,

12 in the case of a member-managed limited liability company,

13 "director" means a member of the bank. The term "director"

14 does not include an advisory director, honorary director,

15 director emeritus, or similar person, unless the person is

16 otherwise performing functions similar to those of a member of

17 the board of directors.

18 "Director of Banking" means the Director of the Division

19 of Banking of the Department of Financial and Professional

20 Regulation.

21 "Eligible depository institution" means an insured savings

22 association that is in default, an insured savings association

23 that is in danger of default, a State or national bank that is

24 in default or a State or national bank that is in danger of

25 default, as those terms are defined in this Section, or a new

26 bank as that term is defined in Section 11(m) of the Federal

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1 Deposit Insurance Act or a bridge bank as that term is defined

2 in Section 11(n) of the Federal Deposit Insurance Act or a new

3 federal savings association authorized under Section

4 11(d)(2)(f) of the Federal Deposit Insurance Act.

5 "Fiduciary" means trustee, agent, executor, administrator,

6 committee, guardian for a minor or for a person under legal

7 disability, receiver, trustee in bankruptcy, assignee for

8 creditors, or any holder of similar position of trust.

9 "Financial institution" means a bank, savings bank,

10 savings and loan association, credit union, or any licensee

11 under the Consumer Installment Loan Act or the Sales Finance

12 Agency Act and, for purposes of Section 48.3, any proprietary

13 network, funds transfer corporation, or other entity providing

14 electronic funds transfer services, or any corporate

15 fiduciary, its subsidiaries, affiliates, parent company, or

16 contractual service provider that is examined by the

17 Commissioner. For purposes of Section 5c and subsection (b) of

18 Section 13 of this Act, "financial institution" includes any

19 proprietary network, funds transfer corporation, or other

20 entity providing electronic funds transfer services, and any

21 corporate fiduciary.

22 "Foundation" means the Illinois Bank Examiners' Education

23 Foundation.

24 "General obligation" means a bond, note, debenture,

25 security, or other instrument evidencing an obligation of the

26 government entity that is the issuer that is supported by the

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1 full available resources of the issuer, the principal and

2 interest of which is payable in whole or in part by taxation.

3 "Guarantee" means an undertaking or promise to answer for

4 payment of another's debt or performance of another's duty,

5 liability, or obligation whether "payment guaranteed" or

6 "collection guaranteed".

7 "In danger of default" means a State or national bank, a

8 federally chartered insured savings association, or an

9 Illinois state chartered insured savings association with

10 respect to which the Commissioner or the appropriate federal

11 banking agency has advised the Federal Deposit Insurance

12 Corporation that:

13 (1) in the opinion of the Commissioner or the

14 appropriate federal banking agency,

15 (A) the State or national bank or insured savings

16 association is not likely to be able to meet the

17 demands of the State or national bank's or savings

18 association's obligations in the normal course of

19 business; and

20 (B) there is no reasonable prospect that the State

21 or national bank or insured savings association will

22 be able to meet those demands or pay those obligations

23 without federal assistance; or

24 (2) in the opinion of the Commissioner or the

25 appropriate federal banking agency,

26 (A) the State or national bank or insured savings

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1 association has incurred or is likely to incur losses

2 that will deplete all or substantially all of its

3 capital; and

4 (B) there is no reasonable prospect that the

5 capital of the State or national bank or insured

6 savings association will be replenished without

7 federal assistance.

8 "In default" means, with respect to a State or national

9 bank or an insured savings association, any adjudication or

10 other official determination by any court of competent

11 jurisdiction, the Commissioner, the appropriate federal

12 banking agency, or other public authority pursuant to which a

13 conservator, receiver, or other legal custodian is appointed

14 for a State or national bank or an insured savings

15 association.

16 "Insured savings association" means any federal savings

17 association chartered under Section 5 of the federal Home

18 Owners' Loan Act and any State savings association chartered

19 under the Illinois Savings and Loan Act of 1985 or a

20 predecessor Illinois statute, the deposits of which are

21 insured by the Federal Deposit Insurance Corporation. The term

22 also includes a savings bank organized or operating under the

23 Savings Bank Act.

24 "Insured savings association in recovery" means an insured

25 savings association that is not an eligible depository

26 institution and that does not meet the minimum capital

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1 requirements applicable with respect to the insured savings

2 association.

3 "Issuer" means for purposes of Section 33 every person who

4 shall have issued or proposed to issue any security; except

5 that (1) with respect to certificates of deposit, voting trust

6 certificates, collateral-trust certificates, and certificates

7 of interest or shares in an unincorporated investment trust

8 not having a board of directors (or persons performing similar

9 functions), "issuer" means the person or persons performing

10 the acts and assuming the duties of depositor or manager

11 pursuant to the provisions of the trust, agreement, or

12 instrument under which the securities are issued; (2) with

13 respect to trusts other than those specified in clause (1)

14 above, where the trustee is a corporation authorized to accept

15 and execute trusts, "issuer" means the entrusters, depositors,

16 or creators of the trust and any manager or committee charged

17 with the general direction of the affairs of the trust

18 pursuant to the provisions of the agreement or instrument

19 creating the trust; and (3) with respect to equipment trust

20 certificates or like securities, "issuer" means the person to

21 whom the equipment or property is or is to be leased or

22 conditionally sold.

23 "Letter of credit" and "customer" shall have the meanings

24 ascribed to those terms in Section 5-102 of the Uniform

25 Commercial Code.

26 "Main banking premises" means the location that is

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1 designated in a bank's charter as its main office.

2 "Maker or obligor" means for purposes of Section 33 the

3 issuer of a security, the promisor in a debenture or other debt

4 security, or the mortgagor or grantor of a trust deed or

5 similar conveyance of a security interest in real or personal

6 property.

7 "Merged bank" means a merging bank that is not the

8 continuing, resulting, or surviving bank in a consolidation or

9 merger.

10 "Merger" includes consolidation.

11 "Merging bank" means a party to a bank merger.

12 "Merging trust company" means a trust company party to a

13 merger with a State bank.

14 "Mid-tier bank holding company" means a corporation that

15 (a) owns 100% of the issued and outstanding shares of each

16 class of stock of a State bank, (b) has no other subsidiaries,

17 and (c) 100% of the issued and outstanding shares of the

18 corporation are owned by a parent bank holding company.

19 "Municipality" means any municipality, political

20 subdivision, school district, taxing district, or agency.

21 "National bank" means a national banking association

22 located in this State and after May 31, 1997, means a national

23 banking association without regard to its location.

24 "Out-of-state bank" means a bank chartered under the laws

25 of a state other than Illinois, a territory of the United

26 States, or the District of Columbia.

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1 "Parent bank holding company" means a corporation that is

2 a bank holding company as that term is defined in the Illinois

3 Bank Holding Company Act of 1957 and owns 100% of the issued

4 and outstanding shares of a mid-tier bank holding company.

5 "Person" means an individual, corporation, limited

6 liability company, partnership, joint venture, trust, estate,

7 or unincorporated association.

8 "Public agency" means the State of Illinois, the various

9 counties, townships, cities, towns, villages, school

10 districts, educational service regions, special road

11 districts, public water supply districts, fire protection

12 districts, drainage districts, levee districts, sewer

13 districts, housing authorities, the Illinois Bank Examiners'

14 Education Foundation, the Chicago Park District, and all other

15 political corporations or subdivisions of the State of

16 Illinois, whether now or hereafter created, whether herein

17 specifically mentioned or not, and shall also include any

18 other state or any political corporation or subdivision of

19 another state.

20 "Public funds" or "public money" means current operating

21 funds, special funds, interest and sinking funds, and funds of

22 any kind or character belonging to, in the custody of, or

23 subject to the control or regulation of the United States or a

24 public agency. "Public funds" or "public money" shall include

25 funds held by any of the officers, agents, or employees of the

26 United States or of a public agency in the course of their

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1 official duties and, with respect to public money of the

2 United States, shall include Postal Savings funds.

3 "Published" means, unless the context requires otherwise,

4 the publishing of the notice or instrument referred to in some

5 newspaper of general circulation in the community in which the

6 bank is located at least once each week for 3 successive weeks.

7 Publishing shall be accomplished by, and at the expense of,

8 the bank required to publish. Where publishing is required,

9 the bank shall submit to the Commissioner that evidence of the

10 publication as the Commissioner shall deem appropriate.

11 "Qualified financial contract" means any security

12 contract, commodity contract, forward contract, including spot

13 and forward foreign exchange contracts, repurchase agreement,

14 swap agreement, and any similar agreement, any option to enter

15 into any such agreement, including any combination of the

16 foregoing, and any master agreement for such agreements. A

17 master agreement, together with all supplements thereto, shall

18 be treated as one qualified financial contract. The contract,

19 option, agreement, or combination of contracts, options, or

20 agreements shall be reflected upon the books, accounts, or

21 records of the bank, or a party to the contract shall provide

22 documentary evidence of such agreement.

23 "Recorded" means the filing or recording of the notice or

24 instrument referred to in the office of the Recorder of the

25 county wherein the bank is located.

26 "Resulting bank" means the bank resulting from a merger or

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1 conversion.

2 "Secretary" means the Secretary of Financial and

3 Professional Regulation, or a person authorized by the

4 Secretary or by this Act to act in the Secretary's stead.

5 "Securities" means stocks, bonds, debentures, notes, or

6 other similar obligations.

7 "Special purpose trust company" means a special purpose

8 trust company under Article IIA of the Corporate Fiduciary

9 Act.

10 "Stand-by letter of credit" means a letter of credit under

11 which drafts are payable upon the condition the customer has

12 defaulted in performance of a duty, liability, or obligation.

13 "State bank" means any banking corporation that has a

14 banking charter issued by the Commissioner under this Act.

15 "State Banking Board" means the State Banking Board of

16 Illinois.

17 "Subsidiary" with respect to a specified company means a

18 company that is controlled by the specified company. For

19 purposes of paragraphs (8) and (12) of Section 5 of this Act,

20 "control" means the exercise of operational or managerial

21 control of a corporation by the bank, either alone or together

22 with other affiliates of the bank.

23 "Surplus" means the aggregate of (i) amounts paid in

24 excess of the par value of capital stock and preferred stock;

25 (ii) amounts contributed other than for capital stock and

26 preferred stock and allocated to the surplus account; and

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1 (iii) amounts transferred from undivided profits.

2 "Tier 1 Capital" and "Tier 2 Capital" have the meanings

3 assigned to those terms in regulations promulgated for the

4 appropriate federal banking agency of a state bank, as those

5 regulations are now or hereafter amended.

6 "Trust company" means a limited liability company or

7 corporation incorporated in this State for the purpose of

8 accepting and executing trusts.

9 "Undivided profits" means undistributed earnings less

10 discretionary transfers to surplus.

11 "Unimpaired capital and unimpaired surplus", for the

12 purposes of paragraph (21) of Section 5 and Sections 32, 33,

13 34, 35.1, 35.2, and 47 of this Act means the sum of the state

14 bank's Tier 1 Capital and Tier 2 Capital plus such other

15 shareholder equity as may be included by regulation of the

16 Commissioner. Unimpaired capital and unimpaired surplus shall

17 be calculated on the basis of the date of the last quarterly

18 call report filed with the Commissioner preceding the date of

19 the transaction for which the calculation is made, provided

20 that: (i) when a material event occurs after the date of the

21 last quarterly call report filed with the Commissioner that

22 reduces or increases the bank's unimpaired capital and

23 unimpaired surplus by 10% or more, then the unimpaired capital

24 and unimpaired surplus shall be calculated from the date of

25 the material event for a transaction conducted after the date

26 of the material event; and (ii) if the Commissioner determines

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1 for safety and soundness reasons that a state bank should

2 calculate unimpaired capital and unimpaired surplus more

3 frequently than provided by this paragraph, the Commissioner

4 may by written notice direct the bank to calculate unimpaired

5 capital and unimpaired surplus at a more frequent interval. In

6 the case of a state bank newly chartered under Section 13 or a

7 state bank resulting from a merger, consolidation, or

8 conversion under Sections 21 through 26 for which no preceding

9 quarterly call report has been filed with the Commissioner,

10 unimpaired capital and unimpaired surplus shall be calculated

11 for the first calendar quarter on the basis of the effective

12 date of the charter, merger, consolidation, or conversion.

13 (Source: P.A. 95-924, eff. 8-26-08; 95-1047, eff. 4-6-09;

14 96-1000, eff. 7-2-10; 96-1163, eff. 1-1-11; revised 8-6-24.)

15 (205 ILCS 5/30) (from Ch. 17, par. 337)

16 Sec. 30. Conversion; merger with trust company or special

17 purpose trust company. Upon approval by the Commissioner a

18 trust company having power so to do under the law under which

19 it is organized may convert into a state bank or may merge into

20 a state bank as prescribed by this Act; except that the action

21 by a trust company shall be taken in the manner prescribed by

22 and shall be subject to limitations and requirements imposed

23 by the law under which it is organized which law shall also

24 govern the rights of its dissenting stockholders. The rights

25 of dissenting stockholders of a state bank shall be governed

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1 by Section 29 of this Act. The conversion or merger procedure

2 shall be:

3 (1) In the case of a merger, the board of directors of both

4 the merging trust company and the merging bank by a majority of

5 the entire board in each case shall approve a merger agreement

6 which shall contain:

7 (a) The name and location of the merging bank and of

8 the merging trust company and a list of the stockholders

9 of each as of the date of the merger agreement;

10 (b) With respect to the resulting bank (i) its name

11 and place of business; (ii) the amount of capital, surplus

12 and reserve for operating expenses; (iii) the classes and

13 the number of shares of stock and the par value of each

14 share; (iv) the charter which is to be the charter of the

15 resulting bank, together with the amendments to the

16 continuing charter and to the continuing by-laws; and (v)

17 a detailed financial statement showing the assets and

18 liabilities after the proposed merger;

19 (c) Provisions governing the manner of converting the

20 shares of the merging bank and of the merging trust

21 company into shares of the resulting bank;

22 (d) A statement that the merger agreement is subject

23 to approval by the Commissioner and by the stockholders of

24 the merging bank and the merging trust company, and that

25 whether approved or disapproved, the parties thereto will

26 pay the Commissioner's expenses of examination;

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1 (e) Provisions governing the manner of disposing of

2 the shares of the resulting bank not taken by the

3 dissenting stockholders of the merging trust company; and

4 (f) Such other provisions as the Commissioner may

5 reasonably require to enable him to discharge his duties

6 with respect to the merger.

7 (2) After approval by the board of directors of the

8 merging bank and of the merging trust company, the merger

9 agreement shall be submitted to the Commissioner for approval

10 together with the certified copies of the authorizing

11 resolution of each board of directors showing approval by a

12 majority of each board.

13 (3) After receipt by the Commissioner of the papers

14 specified in subsection (2), he shall approve or disapprove

15 the merger agreement. The Commissioner shall not approve the

16 agreement unless he shall be of the opinion and finds:

17 (a) That the resulting bank meets the requirements of

18 this Act for the formation of a new bank at the proposed

19 place of business of the resulting bank;

20 (b) That the same matters exist in respect of the

21 resulting bank which would have been required under

22 Section 10 of this Act for the organization of a new bank;

23 and

24 (c) That the merger agreement is fair to all persons

25 affected. If the Commissioner disapproves the merger

26 agreement, he shall state his objections in writing and

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1 give an opportunity to the merging bank and the merging

2 trust company to obviate such objections.

3 (4) To be effective, if approved by the Commissioner, a

4 merger of a bank and a trust company where there is to be a

5 resulting bank must be approved by the affirmative vote of the

6 holders of at least two-thirds of the outstanding shares of

7 stock of the merging bank entitled to vote at a meeting called

8 to consider such action, unless holders of preferred stock are

9 entitled to vote as a class in respect thereof, in which event

10 the proposed merger shall be adopted upon receiving the

11 affirmative vote of the holders of at least two-thirds of the

12 outstanding shares of each class of shares entitled to vote as

13 a class in respect thereof and of the total outstanding shares

14 entitled to vote at such meeting and must be approved by the

15 stockholders of the merging trust company as provided by the

16 Act under which it is organized. The prescribed vote by the

17 merging bank and the merging trust company shall constitute

18 the adoption of the charter and by-laws of the continuing

19 bank, including the amendments in the merger agreement, as the

20 charter and by-laws of the resulting bank. Written or printed

21 notice of the meeting of the stockholders of the merging bank

22 shall be given to each stockholder of record entitled to vote

23 at such meeting at least thirty days before such meeting and in

24 the manner provided in this Act for the giving of notice of

25 meetings of stockholders. The notice shall state that

26 dissenting stockholders of the merging trust company will be

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1 entitled to payment of the value of those shares which are

2 voted against approval of the merger, if a proper demand is

3 made on the resulting bank and the requirements of the Act

4 under which the merging trust company is organized are

5 satisfied.

6 (5) Unless a later date is specified in the merger

7 agreement, the merger shall become effective upon the filing

8 with the Commissioner of the executed merger agreement,

9 together with copies of the resolutions of the stockholders of

10 the merging bank and the merging trust company approving it,

11 certified by the president or a vice-president or, the cashier

12 and also by the secretary or other officer charged with

13 keeping the records. The charter of the merging trust company

14 shall thereupon automatically terminate. The Commissioner

15 shall thereupon issue to the continuing bank a certificate of

16 merger which shall specify the name of the merging trust

17 company, the name of the continuing bank and the amendments to

18 the charter of the continuing bank provided for by the merger

19 agreement. Such certificate shall be conclusive evidence of

20 the merger and of the correctness of all proceedings therefor

21 in all courts and places including the office of the Secretary

22 of State, and said certificate shall be recorded.

23 (6) In the case of a conversion, a trust company shall

24 apply for a charter by filing with the Commissioner:

25 (a) A certificate signed by its president, or a

26 vice-president, and by a majority of the entire board of

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1 directors setting forth the corporate action taken in

2 compliance with the provisions of the Act under which it

3 is organized governing the conversion of a trust company

4 to a bank or governing the merger of a trust company into

5 another corporation;

6 (b) The plan of conversion and the proposed charter

7 approved by the stockholders for the operation of the

8 trust company as a bank. The plan of conversion shall

9 contain (i) the name and location proposed for the

10 converting trust company; (ii) a list of its stockholders

11 as of the date of the stockholders' approval of the plan of

12 conversion; (iii) the amount of its capital, surplus and

13 reserve for operating expenses; (iv) the classes and the

14 number of shares of stock and the par value of each share;

15 (v) the charter which is to be the charter of the resulting

16 bank; and (vi) a detailed financial statement showing the

17 assets and liabilities of the converting trust company;

18 (c) A statement that the plan of conversion is subject

19 to approval by the Commissioner and that, whether approved

20 or disapproved, the converting trust company will pay the

21 Commissioner's expenses of examination; and

22 (d) Such other instruments as the Commissioner may

23 reasonably require to enable him to discharge his duties

24 with respect to the conversion.

25 (7) After receipt by the Commissioner of the papers

26 specified in subsection (6), he shall approve or disapprove

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1 the plan of conversion. The Commissioner shall not approve the

2 plan of conversion unless he shall be of the opinion and finds:

3 (a) That the resulting bank meets the requirements of

4 this Act for the formation of a new bank at the proposed

5 place of business of the resulting bank;

6 (b) That the same matters exist in respect of the

7 resulting bank which would have been required under

8 Section 10 of this Act for the organization of a new bank;

9 and

10 (c) That the plan of conversion is fair to all persons

11 affected.

12 If the commissioner disapproves the plan of conversion, he

13 shall state his objections in writing and give an opportunity

14 to the converting trust company to obviate such objections.

15 (8) Unless a later date is specified in the plan of

16 conversion, the conversion shall become effective upon the

17 Commissioner's approval, and the charter proposed in the plan

18 of conversion shall constitute the charter of the resulting

19 bank. The Commissioner shall issue a certificate of conversion

20 which shall specify the name of the converting trust company,

21 the name of the resulting bank and the charter provided for by

22 said plan of conversion. Such certificate shall be conclusive

23 evidence of the conversion and of the correctness of all

24 proceedings therefor in all courts and places including the

25 office of the Secretary of State, and such certificate shall

26 be recorded.

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1 (8.5) A special purpose trust company under Article IIA of

2 the Corporate Fiduciary Act may merge with a State bank or

3 convert to a State bank as if the special purpose trust company

4 were a trust company under Article II of the Corporate

5 Fiduciary Act, subject to rules adopted by the Department.

6 (9) In the case of either a merger or a conversion under

7 this Section 30, the resulting bank shall be considered the

8 same business and corporate entity as each merging bank and

9 merging trust company or as the converting trust company with

10 all the property, rights, powers, duties and obligations of

11 each as specified in Section 28 of this Act.

12 (Source: P.A. 91-357, eff. 7-29-99.)

13 Section 90-20. The Corporate Fiduciary Act is amended by

14 changing Sections 1-5.08, 2-1, 4-1, 4-2, 4-5, 4A-15, and 5-1

15 and by adding Article IIA as follows:

16 (205 ILCS 620/1-5.08) (from Ch. 17, par. 1551-5.08)

17 Sec. 1-5.08. "Foreign corporation" means:

18 (a) any bank, savings and loan association, savings bank,

19 or other corporation, limited liability company, or other

20 entity now or hereafter organized under the laws of any state

21 or territory of the United States of America, including the

22 District of Columbia, other than the State of Illinois;

23 (b) any national banking association having its principal

24 place of business in any state or territory of the United

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1 States of America, including the District of Columbia, other

2 than the State of Illinois; and

3 (c) any federal savings and loan association or federal

4 savings bank having its principal place of business in any

5 state or territory of the United States of America, including

6 the District of Columbia, other than the State of Illinois.

7 (Source: P.A. 91-97, eff. 7-9-99.)

8 (205 ILCS 620/2-1) (from Ch. 17, par. 1552-1)

9 Sec. 2-1. (a) Any corporation which has been or shall be

10 incorporated under the general corporation laws of this State

11 and any limited liability company established under the

12 Limited Liability Company Act for the purpose of accepting and

13 executing trusts, and any state bank, state savings and loan

14 association, state savings bank, or other special corporation

15 now or hereafter authorized by law to accept or execute

16 trusts, may be appointed to act as a fiduciary in any capacity

17 a natural person or corporation may act, and shall include,

18 but not be limited to, acting as assignee or trustee by deed,

19 and executor, guardian or trustee by will, custodian under the

20 Illinois Uniform Transfers to Minors Act and such appointment

21 shall be of like force as in case of appointment of a natural

22 person and shall be designated a corporate fiduciary.

23 (b) No corporate fiduciary shall dissolve or cease its

24 corporate existence without prior notice to and approval by

25 the Commissioner and compliance with the requirements of

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1 Section 7-1 of this Act.

2 (Source: P.A. 100-863, eff. 8-14-18.)

3 (205 ILCS 620/Art. IIA heading new)

4 ARTICLE IIA. SPECIAL PURPOSE TRUST COMPANY

5 AUTHORITY AND ORGANIZATION

6 (205 ILCS 620/2A-1 new)

7 Sec. 2A-1. Purpose. The General Assembly finds that

8 corporate fiduciaries perform a vital service in the custody,

9 safekeeping, and management of physical assets, traditional

10 electronic assets, and emerging digital assets for customers;

11 that it is in the public interest that trust companies may be

12 organized for the special purpose of providing fiduciary

13 custodial services and related services to customers; that the

14 operation of special purpose trust companies is impressed with

15 a public interest such that it should be supervised as an

16 activity under this Act; and that such special purpose trust

17 companies should obtain their authority, conduct their

18 operations, and be supervised as corporate fiduciaries as

19 provided in this Act.

20 (205 ILCS 620/2A-2 new)

21 Sec. 2A-2. Special purpose trust company. Any corporation

22 that has been or shall be incorporated under the general

23 corporation laws of this State and any limited liability

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1 company established under the Limited Liability Company Act

2 for the special purpose of providing fiduciary custodial

3 services or providing other like or related services as

4 specified by rule, consistent with this Article, may be

5 appointed to act as a fiduciary with respect to such services

6 and shall be designated a special purpose trust company.

7 (205 ILCS 620/2A-3 new)

8 Sec. 2A-3. Certificate of authority.

9 (a) It shall be lawful for any person to engage in the

10 activity of a special purpose trust company after the

11 effective date of this amendatory Act of the 104th General

12 Assembly upon filing an application for and procuring from the

13 Secretary a certificate of authority stating that the person

14 has complied with the requirements of this Act and is

15 qualified to engage in the activity of a special purpose trust

16 company.

17 (b) No natural person or natural persons, firm,

18 partnership, or corporation not having been authorized under

19 this Act shall transact in the activity of a special purpose

20 trust company. A person who violates this Section is guilty of

21 a Class A misdemeanor and the Attorney General or State's

22 Attorney of the county in which the violation occurs may

23 restrain the violation by a complaint for injunctive relief.

24 (c) Any entity that holds a certificate of authority under

25 Article II of this Act may engage in the activity of a special

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1 purpose trust company without applying for or receiving a

2 certificate of authority under this Article IIA.

3 (d) Nothing in this Section shall limit the authority of a

4 depository institution to provide nonfiduciary custodial

5 services consistent with its charter in accordance with

6 applicable law and subject to any limitations and restrictions

7 imposed by its chartering authority.

8 (205 ILCS 620/2A-4 new)

9 Sec. 2A-4. Rulemaking and organization.

10 (a) The Department shall adopt rules for the

11 administration of this Article, including, but not limited to:

12 rules for defining statutory terms; applying for a certificate

13 of authority; review, investigation, and approval of

14 application for certificate of authority; capital

15 requirements; office location and name; collateralizing

16 fiduciary assets; and general corporate powers. The authority

17 of this subsection (a) is in addition to, and in no way limits,

18 the authority of the Secretary under subsection (a) of Section

19 5-1.

20 (b) Articles III, V, VI, VII, VIII, and IX of this Act

21 shall apply to a special purpose trust company under this

22 Article as if the special purpose trust company were a trust

23 company authorized under Article II of this Act, subject to

24 any rules adopted by the Department.

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1 (205 ILCS 620/4-1) (from Ch. 17, par. 1554-1)

2 Sec. 4-1. Foreign corporate fiduciary; certificate of

3 authority. After July 13, 1953, no foreign corporation,

4 including banks, savings banks, and savings and loan

5 associations, now or hereafter organized under the laws of any

6 other state or territory, and no national banking association

7 having its principal place of business in any other state or

8 territory or federal savings and loan association or federal

9 savings bank having its principal place of business in any

10 other state or territory, may procure a certificate of

11 authority under Article II of this Act and any certificate of

12 authority heretofore issued hereunder to any such foreign

13 corporation or to any such national banking association shall

14 become null and void on July 13, 1953, except that any such

15 foreign corporation or any such national banking association

16 actually acting as trustee, executor, administrator,

17 administrator to collect, guardian, or in any other ~~like~~

18 fiduciary capacity in this State on July 13, 1953, may

19 continue to act as such fiduciary in that particular trust or

20 estate until such time as it has completed its duties

21 thereunder. Such foreign corporation and such national banking

22 association shall be subject to the provisions in this Article

23 IV, regardless of whether its certificate of authority was

24 obtained before July 13, 1953. The right and eligibility of

25 any foreign corporation, any national banking association

26 having its principal place of business in any other state or

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1 territory or any federal savings and loan association or

2 federal savings bank having its principal place of business in

3 any other state or territory hereafter to act as trustee,

4 executor, administrator, administrator to collect, guardian,

5 or in any other ~~like~~ fiduciary capacity in this State shall be

6 governed solely by the provisions of this Act. Provided,

7 however, that the Commissioner shall not be required to

8 conduct an annual examination of such foreign corporation

9 pursuant to Section 5-2 of this Act, but may examine such

10 foreign corporation as the Commissioner deems appropriate.

11 "Principal place of business" of any bank, federal savings and

12 loan association or savings bank, for purposes of this Article

13 IV, means the principal office as designated on the charter by

14 its principal regulator.

15 (Source: P.A. 91-97, eff. 7-9-99.)

16 (205 ILCS 620/4-2) (from Ch. 17, par. 1554-2)

17 Sec. 4-2. Foreign corporation; eligibility. Any foreign

18 corporation may act in this State as trustee, executor,

19 administrator, administrator to collect, guardian, or in any

20 other like fiduciary capacity, whether the appointment is by

21 will, deed, court order or otherwise, without complying with

22 any laws of this State relating to the qualification of

23 corporations organized under the laws of this State to conduct

24 a trust business or laws relating to the qualification of

25 foreign corporations, provided only (1) such foreign

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1 corporation is authorized by the laws of the state of its

2 organization or domicile to act as a fiduciary in that state,

3 and (2) a corporation organized under the laws of this State, a

4 national banking association having its principal place of

5 business in this State, and a federal savings and loan

6 association or federal savings bank having its principal place

7 of business in this State and authorized to act as a fiduciary

8 in this State, may, in such other state, act in a similar

9 fiduciary capacity or capacities, as the case may be, upon

10 conditions and qualifications which the Commissioner finds are

11 not unduly restrictive when compared to those imposed by the

12 laws of Illinois. Any foreign corporation eligible to act in a

13 fiduciary capacity in this State pursuant to the provisions of

14 this Act, shall be deemed qualified to accept and execute

15 trusts in this State within the meaning of this Act and the

16 Probate Act of 1975, approved August 7, 1975, as amended. No

17 foreign corporation shall be permitted to act as trustee,

18 executor, administrator, administrator to collect, guardian or

19 in any other ~~like~~ fiduciary capacity in this State except as

20 provided in Article IV of this Act; however, any foreign

21 corporation actually acting in any such fiduciary capacity in

22 this State on July 13, 1953, although not eligible to so act

23 pursuant to the provisions of this Article IV, may continue to

24 act as fiduciary in that particular trust or estate until such

25 time as it has completed its duties thereunder.

26 (Source: P.A. 92-685, eff. 7-16-02.)

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1 (205 ILCS 620/4-5) (from Ch. 17, par. 1554-5)

2 Sec. 4-5. Certificate of authority; fees; certificate of

3 reciprocity.

4 (a) Prior to the time any foreign corporation acts in this

5 State as testamentary trustee, trustee appointed by any court,

6 trustee under any written agreement, declaration or instrument

7 of trust, executor, administrator, administrator to collect,

8 guardian or in any other ~~like~~ fiduciary capacity, such foreign

9 corporation shall apply to the Commissioner of Banks and Real

10 Estate for a certificate of authority with reference to the

11 fiduciary capacity or capacities in which such foreign

12 corporation proposes to act in this State, and the

13 Commissioner of Banks and Real Estate shall issue a

14 certificate of authority to such corporation concerning only

15 the fiduciary capacity or such of the fiduciary capacities to

16 which the application pertains and with respect to which he

17 has been furnished satisfactory evidence that such foreign

18 corporation meets the requirements of Section 4-2 of this Act.

19 The certificate of authority shall set forth the fiduciary

20 capacity or capacities, as the case may be, for which the

21 certificate is issued, and shall recite and certify that such

22 foreign corporation is eligible to act in this State in such

23 fiduciary capacity or capacities, as the case may be, pursuant

24 to the provisions of this Act. The certificate of authority

25 shall remain in full force and effect until such time as such

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1 foreign corporation ceases to be eligible so to act under the

2 provisions of this Act.

3 (b) Each foreign corporation making application for a

4 certificate of authority shall pay reasonable fees to the

5 Commissioner of Banks and Real Estate as determined by the

6 Commissioner for the services of his office.

7 (c) Any foreign corporation holding a certificate of

8 reciprocity which recites and certifies that such foreign

9 corporation is eligible to act in this State in any such

10 fiduciary capacity pursuant to the provisions of Article IV of

11 this Act or any predecessor Act upon the same subject, issued

12 prior to the effective date of this amendatory Act of 1987 may

13 act in this State under such certificate of reciprocity in any

14 such fiduciary capacity without applying for a new certificate

15 of authority. Such certificate of reciprocity shall remain in

16 full force and effect until such time as such foreign

17 corporation ceases to be eligible so to act under the

18 provisions of Article IV of this Act.

19 (d) Any foreign corporation acting in Illinois under a

20 certificate of authority or a certificate of reciprocity shall

21 report changes in its name or address to the Commissioner and

22 shall notify the Commissioner when it is no longer serving as a

23 corporate fiduciary in Illinois.

24 (e) The provisions of this Section shall not apply to a

25 foreign corporation establishing or acquiring and maintaining

26 a place of business in this State to conduct business as a

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1 fiduciary in accordance with Article IVA of this Act.

2 (Source: P.A. 92-483, eff. 8-23-01.)

3 (205 ILCS 620/4A-15)

4 Sec. 4A-15. Representative offices.

5 (a) A foreign corporation conducting fiduciary activities

6 outside this State, but not conducting fiduciary activities in

7 this State may establish a representative office under the

8 Foreign Bank Representative Office Act. At these offices, the

9 foreign corporation may market and solicit fiduciary services

10 and provide back office and administrative support to the

11 foreign corporation's fiduciary activities, but it may not

12 engage in fiduciary activities.

13 (b) A foreign corporation invested with trust powers or

14 authority to act as a fiduciary pursuant to the laws of its

15 home state but not conducting fiduciary activities must apply

16 for and procure a license under the Foreign Bank

17 Representative Office Act before establishing an office in

18 this State for the purpose of marketing, soliciting, or

19 transacting any service or product, unless such office is

20 otherwise established as permitted by and in accordance with

21 this Act, the Illinois Banking Act, the Savings Bank Act, the

22 Foreign Banking Office Act, or any Act specified by rules

23 adopted under this Act.

24 (Source: P.A. 92-483, eff. 8-23-01; 92-811, eff. 8-21-02.)

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1 (205 ILCS 620/5-1) (from Ch. 17, par. 1555-1)

2 Sec. 5-1. Commissioner's powers. The Commissioner of Banks

3 and Real Estate shall have the following powers and authority

4 and is charged with the duties and responsibilities designated

5 in this Act:

6 (a) To promulgate, in accordance with the Illinois

7 Administrative Procedure Act, reasonable rules for the purpose

8 of administering the provisions of this Act, for the purpose

9 of protecting consumers of this State as may be necessary and

10 appropriate, and for the purpose of incorporating by reference

11 rules promulgated by the Federal Deposit Insurance

12 Corporation, the Board of Governors of the Federal Reserve

13 System, the Office of the Comptroller of the Currency, the

14 Office of Thrift Supervision, or their successors that pertain

15 to corporate fiduciaries, including, but not limited to,

16 standards for the operation and conduct of the affairs of

17 corporate fiduciaries;

18 (b) To issue orders for the purpose of administering the

19 provisions of this Act and any rule promulgated in accordance

20 with this Act;

21 (c) To appoint hearing officers to conduct hearings held

22 pursuant to any of the powers granted to the Commissioner

23 under this Section for the purpose of administering this Act

24 and any rule promulgated in accordance with this Act;

25 (d) To subpoena witnesses, to compel their attendance, to

26 administer an oath, to examine any person under oath and to

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1 require the production of any relevant books, papers, accounts

2 and documents in the course of and pursuant to any

3 investigation being conducted, or any action being taken, by

4 the Commissioner in respect of any matter relating to the

5 duties imposed upon, or the powers vested in, the Commissioner

6 under the provisions of this Act, or any rule or regulation

7 promulgated in accordance with this Act;

8 (e) To conduct hearings;

9 (f) To promulgate the form and content of any applications

10 required under this Act;

11 (g) To impose civil penalties of up to $100,000 against

12 any person or corporate fiduciary for each violation of any

13 provision of this Act, any rule promulgated in accordance with

14 this Act, any order of the Commissioner or any other action

15 which, in the Commissioner's discretion, is a detriment or

16 impediment to accepting or executing trusts; and

17 (h) To address any inquiries to any corporate fiduciary,

18 or the officers thereof, in relation to its doings and

19 conditions, or any other matter connected with its affairs,

20 and it shall be the duty of any corporate fiduciary or person

21 so addressed, to promptly reply in writing to such inquiries.

22 The Commissioner may also require reports from any corporate

23 fiduciary at any time he may deem desirable.

24 (Source: P.A. 96-1365, eff. 7-28-10.)

25 Section 90-25. The Consumer Fraud and Deceptive Business

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1 Practices Act is amended by adding Section 2HHHH as follows:

2 (815 ILCS 505/2HHHH new)

3 Sec. 2HHHH. Violations of the Digital Assets and Consumer

4 Protection Act. Any person who violates Article 5 of the

5 Digital Assets and Consumer Protection Act commits an unlawful

6 practice within the meaning of this Act.

7 Article 99. Non-acceleration and Effective Date

8 Section 99-95. No acceleration or delay. Where this Act

9 makes changes in a statute that is represented in this Act by

10 text that is not yet or no longer in effect (for example, a

11 Section represented by multiple versions), the use of that

12 text does not accelerate or delay the taking effect of (i) the

13 changes made by this Act or (ii) provisions derived from any

14 other Public Act.

15 Section 99-99. Effective date. This Act takes effect upon

16 becoming law.".