Crypto Glossary for Illinois: Plain-English Definitions

How to use this

Terms are grouped by what they are actually about rather than alphabetically, because the grouping does half the explaining. Illinois-specific vocabulary comes first, since that is the part you will not find in a general glossary.

Illinois

BTM: Bitcoin teller machine, also called a crypto kiosk or crypto ATM. Illinois has roughly 1,008 of them and caps their charges at the greater of $5 or 18%.
CARD Act: Federal legislation setting a five-year minimum before gift card funds may expire. Applies to multi-merchant prepaid cards that fall outside the stricter Illinois gift certificate statute.
DACPA: The Illinois Digital Assets and Consumer Protection Act (SB 1797), signed 18 August 2025. Requires IDFPR licensing of digital asset businesses by 1 July 2027, with customer assets segregated, fully backed and held in trust.
DATA / Digital Asset Tax Act: Article 3 of Illinois Public Act 104-0468, effective 1 January 2027. A 0.2% tax on the value of digital assets a broker exchanges, transfers or stores for a customer, charged regardless of profit.
Digital asset broker: Under Illinois law, a firm that exchanges, transfers or stores digital assets on behalf of customers. The definition draws on Internal Revenue Code §6045(c)(1)(D). Merchants accepting crypto as payment are not brokers.
IDFPR: The Illinois Department of Financial and Professional Regulation. Licenses money transmitters, registers crypto kiosk operators, and from 2027 licenses digital asset businesses with examination and enforcement powers.
Kiosk Act: The Illinois Digital Asset Kiosk Act (SB 2319). Caps kiosk charges at the greater of $5 or 18%, limits daily activity to $2,500 for new customers and $10,500 for established ones, and creates a statutory refund right for fraud victims.
Two-way kiosk: A crypto machine that both sells and buys back, dispensing cash against a crypto send. Sell rates are usually better than buy rates; Illinois daily caps apply in both directions.

Regulation

FinCEN: The Financial Crimes Enforcement Network. US federal body requiring money services businesses to register, run anti-money-laundering programmes, verify customers and file suspicious activity reports.
KYC: Know Your Customer — the identity verification every licensed US crypto business must perform. Not optional, and services offering to skip it are operating outside federal law.
MSB: Money Services Business. The federal registration category covering exchanges, kiosk operators and similar firms, bringing Bank Secrecy Act obligations.
MTL: Money Transmitter Licence. Issued at state level — in Illinois under the Uniform Money Transmission Modernization Act (205 ILCS 658), effective 1 January 2026 — and verifiable on NMLS Consumer Access.
NMLS Consumer Access: The public register operated by the Conference of State Bank Supervisors. Search a company here to confirm a money transmitter licence number, status and state coverage. Ninety seconds, and the single most useful check available.
Structuring: Deliberately splitting transactions to stay under a reporting threshold. A federal offence regardless of whether the underlying money is lawful, and exactly what suspicious activity reporting is designed to surface.

Money

ACH: Automated Clearing House — the US bank transfer network. The cheapest way to fund an exchange account, usually free, taking one to three business days to settle.
Exchange: A venue matching buyers and sellers of digital assets. In Illinois, one serving customers must be licensed by IDFPR by 1 July 2027 and registered with FinCEN federally.

Trading

Limit order: An instruction to buy or sell only at a specified price or better. The correct default for anything above pocket money, and it puts you on the cheaper maker side of most fee schedules.
Maker / taker: A maker adds liquidity by posting an order that rests on the book; a taker removes it by filling against existing orders. Maker fees are lower, sometimes zero at high volume.
Market order: An instruction to buy or sell immediately at whatever price is available. Fine at small size; on a large order it walks the book and you pay for it.
OTC desk: Over-the-counter. A desk quoting a single price for a large block rather than executing against a public order book. Chicago has real depth here; typical minimums start around $100,000.
Slippage: The difference between the price you expected and the price you got, caused by an order consuming multiple levels of the order book. Larger on thin books and larger orders.
Spread: The gap between the best bid and the best ask. On a kiosk, the difference between the machine’s quoted rate and the market price — a cost entirely separate from the disclosed fee.

Custody

Cold storage: Keeping private keys on a device that never connects to the internet — typically a hardware wallet. The standard for anything you would be genuinely damaged to lose.
Hardware wallet: A physical device storing private keys offline. Buy only from the manufacturer — tampered devices supplied with pre-generated recovery phrases are a known and undetectable attack.
Private key: The secret that authorises spending from an address. Whoever holds it controls the asset — there is no other layer of ownership and no appeal.
Recovery phrase: Twelve or twenty-four words generated when you set up a self-custody wallet. A complete backup of the wallet. Write it on paper, never in a photo or password manager, two copies in two locations.
Self-custody: Holding your own private keys rather than relying on a platform. Removes counterparty risk entirely and replaces it with personal responsibility for the recovery phrase.
Wallet: Software or hardware managing private keys. It does not "contain" coins — the coins exist on the blockchain, and the wallet holds the authority to move them.

Security

SIM swap: An attack where someone persuades a mobile carrier to move your phone number to their device, then resets accounts via SMS codes. The most common way ordinary crypto accounts are emptied. Use an authenticator app instead.
Two-factor authentication: A second credential beyond a password. Use an authenticator app, never SMS — SMS-based two-factor is what SIM-swap attacks defeat.

Tax

Basis: What you paid for an asset, including fees. Subtracted from sale proceeds to calculate a capital gain or loss. The record people most often wish they had kept.
Disposal: Any event that ends your ownership of an asset — selling, swapping for another asset, or spending it. Each one produces a capital gain or loss federally.

Technical

Address: A string identifying a destination on a blockchain, similar in function to an account number. Sending to a wrong address is permanent and unrecoverable.
Lightning Network: A payment layer built on bitcoin allowing near-instant transfers at negligible cost. Particularly useful for small gift card purchases where on-chain fees would be a meaningful share of the amount.
On-chain: A transaction recorded directly on a blockchain, as opposed to one settled inside a platform or on a payment layer. On-chain transfers carry a network fee and take minutes to confirm.
Sats / satoshi: The smallest unit of bitcoin — one hundred-millionth of one. You never buy a whole bitcoin; you buy a quantity of satoshis priced in dollars.
Stablecoin: A digital asset pegged to a currency, usually the dollar. Illinois’s Digital Asset Tax Act explicitly includes stablecoins in its definition, so the 0.2% applies to them like anything else.

Spending

Sats-back: A rebate paid in bitcoin on a purchase, common on crypto gift card marketplaces. Rates are promotional, range from about 1% to 25% depending on provider and brand, and change constantly.

The seven things that actually matter

If you take nothing else from this page, take these. They prevent almost every avoidable loss.

A private key controls the asset. Whoever has it owns it.
A recovery phrase cannot be recovered. Paper, two copies, two locations.
Transactions are irreversible. Test new addresses with a small amount.
Every disposal is a taxable event. Selling, swapping, spending.
Volatility is the product. Size positions accordingly.
Verify licensing on NMLS Consumer Access. Ninety seconds, before you deposit.
Anyone who contacts you first is running a script. Without exception.

Questions Illinois readers actually ask

Do I need to understand blockchain to buy crypto?

No, in the same way you do not need to understand ACH batch processing to use a bank. What matters is the practical layer: that a private key controls the asset, that a recovery phrase cannot be recovered, that transactions are irreversible, that every disposal is taxable, and that you can verify a platform’s licensing yourself. That is about an hour of reading.

What is the difference between a spread and a fee?

A fee is a disclosed charge — a percentage or dollar amount added on. A spread is built into the price you are quoted, so it never appears as a line item. At a crypto kiosk both apply separately: Illinois caps the fee at the greater of $5 or 18%, but the exchange rate the machine offers is a distinct cost on top. Read both figures on the disclosure screen.

What does “not your keys, not your coins” mean?

That if a platform holds the private keys, you hold a claim against the platform rather than the asset itself. Illinois law now improves that position substantially — licensed firms must segregate customer assets, keep them fully backed and hold them in trust so they are protected in insolvency. It is still a claim, not possession.

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