Illinois Governor JB Pritzker signed a budget bill into law that includes a 0.2% "privilege tax" on crypto transactions. The crypto industry, including groups like the Crypto Council for Innovation and a16z Crypto, has voiced strong opposition, arguing it unfairly targets digital assets and will drive innovation out of the state.
This development marks Illinois as the first state to implement a broad transaction tax on digital assets, potentially setting a precedent for other states and creating a challenging regulatory environment for the crypto industry in the US.
Illinois Governor JB Pritzker has signed a budget bill into law that includes a new 0.2% "privilege tax" on cryptocurrency transactions. This move comes despite strong opposition from the crypto industry, which had urged the governor to veto the provision.
The Crypto Council for Innovation (CCI) and other industry groups argued that the tax is unprecedented and unfairly targets digital assets. They stated that no comparable financial transaction tax exists for stocks, bonds, or derivatives in any other state. The CCI likened taxing digital asset transactions based on the underlying technology to taxing email because it is delivered electronically rather than by post.
Industry representatives warned that the tax would discourage innovation and drive businesses and entrepreneurs out of Illinois. They also noted that the timing is poor, as the industry is already grappling with federal regulations and the development of a national crypto tax framework.
The new tax applies to all digital asset transactions processed on registered platforms within the state. It could also affect out-of-state companies with significant customer activity in Illinois. Digital asset brokers operating in the state will also face new registration and reporting requirements.
The tax is part of a larger fiscal package aimed at closing a budget gap for fiscal year 2027. It is projected to generate over $800 million in new tax revenue for the state's $55.9 billion budget.