Illinois Takes Aggressive Stance on Crypto Regulations with DARA Bill

Blockchain and Web3 accelerator Alliance DAO has raised concerns about the Digital Assets Regulation Act (DARA), a new digital asset regulation bill submitted to the Illinois State Legislature on 9th March 2023.

The Alliance DAO, a decentralized autonomous organization consisting of accelerator companies and founders, tweeted that if passed, the bill would classify individuals conducting digital asset business activities without obtaining licenses as felons.

The Alliance DAO expressed its concerns for the Illinois state’s blockchain industry, which has been a center for blockchain technology for a long time, with dozens of exchanges and blockchain venture capitals creating jobs and generating taxes.

According to the Alliance DAO, the Illinois state lawmakers who proposed the bill claimed to have discussed it with numerous cryptocurrency companies, but upon inquiry, many of the firms denied knowledge of the proposed bill and expressed opposition to it. Consequently, some companies are already considering leaving the state.

Illinois state has been increasingly active in regulating cryptocurrencies, and in February 2023, Senator Robert Peters proposed the Digital Property Protection and Enforcement Act, which provides authority to the federal attorney general or state attorney general to order the modification or cancellation of blockchain transactions executed through smart contracts.

The DARA bill seeks to impose strict compliance requirements on digital assets, including a ban on DeFi protocols and core infrastructures, as well as prohibiting the entire industry from NFT, GameFi, trading, mining, and staking. The bill also gives Illinois’s financial and regulatory authorities unlimited authority to investigate and enforce comprehensive regulation of the cryptocurrency industry.

If passed, the regulatory authorities would have the power to issue or refuse licenses and suspend or revoke existing licenses. Companies applying for a license would have to provide fingerprints of senior executives and legal and financial records within ten years related to the company. Regulatory authorities would also have the right to request investigations of the company’s employees, conduct audits of all decentralized autonomous organizations, provide written reports on conflicts of interest, perform a comprehensive risk assessment of all code or protocols.

In summary, the Alliance DAO has raised concerns about the DARA bill’s potential impact on Illinois’s blockchain industry, which may force many companies to leave the state. As the Illinois State Legislature continues to consider the bill, the cryptocurrency industry will be monitoring the situation closely.

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