Illinois Introduces Controversial Tax on Digital Asset Transactions in State Budget

A 0.2% tax on any business activity related to digital assets was included at the last moment, and it appears unlikely to be altered, according to two sources familiar with the developments.

— Governor J.B. Pritzker of Illinois has signed off on the legislature’s $56 billion budget, which incorporates a new 0.2% tax on business activities involving digital assets.

— Businesses that exchange, store, or transfer digital assets for residents of Illinois will need to report this tax, as stipulated in the legislation.

— The tax was added at the last minute, as stated by two individuals familiar with the situation, and the legislature is currently out of session for the year.

The cryptocurrency sector is expressing discontent over a new tax regulation in Illinois that imposes a 0.2% tax on businesses dealing with or storing cryptocurrency for clients in the state, but efforts to amend it in the short term may be futile.

The law establishes a 0.2% tax on «receiving any digital asset business activity,» as defined by the bill, which characterizes digital asset business activity as «any singular instance of exchanging, transferring, or storing a digital asset as part of a business or on behalf of a customer.»

This tax applies to companies based in Illinois or those providing services to Illinois residents with total gross receipts of at least $100,000. It is projected to generate approximately $60 million, according to a person tracking the legislative process.

The provision was added to Illinois’ broader budget bill at the last minute, and it was approved by Governor Pritzker on June 16, as reported on the bill’s status page. The legislation outlines a budget of around $56 billion for the 2027 fiscal year and includes new taxes on fantasy sports, social media, and other sectors, as reported by ABC 7.

Furthermore, the bill is broad and may encompass digital money beyond just cryptocurrency — for example, electronic bank transfers, according to NYU Stern School of Business Adjunct Professor Austin Campbell on X (formerly Twitter).

It remains uncertain whether this legislation can be amended in the near future. Both the Illinois Senate and House calendars indicate that the legislature is out of session for the remainder of the year. There is a veto session scheduled for the fall, during which the governor could implement a line-item veto — a request made by the industry interest group Crypto Council for Innovation in a letter dated June 16 — but it is unclear whether Pritzker will take that action. The tax is set to take effect on January 1, 2027.

«Unlike traditional tax structures that relate to income, gains, or profits, this law would impose a 0.2% tax on the everyday use of digital asset services by customers, such as exchange, transfer, or custody activities,» CCI noted in its correspondence with the governor, arguing that this measure utilizes the tax code to favor certain industries by treating cryptocurrency differently. «There is essentially no comparable state financial transaction tax on the exchange, transfer, or custody of stocks, bonds, or derivatives anywhere else in the nation.»

One individual following the situation stated that the most probable avenue for challenging or modifying the tax would be through a lawsuit. Several organizations are already contemplating legal action, but no filings have occurred yet.

The individual also pointed out that this provision came just months after the cryptocurrency industry supported Rep. Raja Krishnamoorthi with $10 million during Illinois’ Democratic Senate primary, opposing Pritzker’s preferred candidate, Lieutenant Governor Juliana Stratton. Stratton won the primary and is expected to succeed outgoing lawmaker Dick Durbin as the next Senator from Illinois.

The industry advocacy group Stand With Crypto, which is supported by Coinbase, assigned Stratton an «F» grade regarding digital assets, based on a single post on X (formerly Twitter) where Stratton remarked that «MAGA-backed crypto bros are dumping $7 million» into the primary race.

This tax legislation stands in stark contrast to previous measures from Illinois, which recently passed the Digital Assets and Consumer Protection Act. Miles Jennings, head of policy and general counsel at Andreessen Horowitz Crypto, characterized that bill as «a constructive approach to blockchain technology» while labeling the new tax as «one of the most anti-crypto laws in the U.S.»

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In May, combined exchange volumes fell 3.45% to $4.41 trillion; the lowest level since September 2024. RWA perpetual futures volumes increased by 10.4% against the trend, reaching a new all-time high.

In May, combined exchange volumes fell 3.45% to $4.41 trillion; the lowest level since September 2024. RWA perpetual futures volumes increased by 10.4% against the trend, reaching a new all-time high.

Why it matters:

In May, combined exchange volumes fell 3.45% to $4.41 trillion; the lowest level since September 2024. RWA perpetual futures volumes increased by 10.4% against the trend, reaching a new all-time high.