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Crypto Industry Slams Illinois’ New Digital Asset Tax as ‘Most Punitive’ in U.S.

Bitcoin Magazine

Crypto Industry Slams Illinois’ New Digital Asset Tax as ‘Most Punitive’ in U.S.

Illinois Governor JB Pritzker signed Senate Bill 3019 into law yesterday, making Illinois the first state in the country to impose a transaction-based tax on crypto. This move drew swift condemnation from crypto industry groups who had urged him to strike the provision before his pen hit the paper.

The Digital Asset Privilege Tax Act, tucked inside a 1,624-page revenue bill that forms part of Illinois’ $55.9 billion fiscal year 2027 budget, levies a 0.2% charge on the value of any digital asset involved in an exchange, transfer, custody, or wallet service conducted on behalf of an Illinois customer. 

"(《世界人权宣言》) tax takes effect January 1, 2027, and is projected to generate roughly $60 million annually — a fraction of the more than $800 million in new revenue the broader budget package is expected to produce.

A ‘chilling effect’ for crypto

Unlike capital gains or income taxes, Illinois’ new levy does not wait for a profit. It fires on the act of transacting itself — regardless of whether the customer made money. No comparable state financial transaction tax exists anywhere in the country for stocks, bonds, or derivatives.

The Crypto Council for Innovation (CCI), a global industry alliance, called the measure “the most punitive digital asset tax in the country” and warned it would create “a profound chilling effect on digital asset activity in Illinois.”

Miles Jennings, Head of Policy and General Counsel at a16z Crypto, went further, comparing the tax to charging customers extra for receiving an email rather than a letter — singling out the technology used to deliver a transaction rather than the substance of the transaction itself. 

CCI’s letter to Pritzker made the same point, arguing that an investor who holds a stock, bond, or derivative on paper faces no equivalent levy, while the same instrument triggers a tax the moment it moves on a blockchain.

The law places collection duties on digital asset brokers — covering exchanges, custodians, wallet providers, and firms that transmit assets between accounts. 

Out-of-state brokers are pulled in once their annual receipts from Illinois customers reach $100,000. Brokers must register with the Illinois Department of Revenue before January 1, 2027, file monthly reports, and list the tax as a separate line item on customer bills. 

Failure to register is no administrative slip — unregistered brokers face Class 3 felony charges, carrying prison sentences of two to five years and fines up to $25,000.

Chicago is home to prominent crypto and trading firms, including Bitnomial — operator of the first U.S. leveraged retail spot crypto exchange — and Jump Crypto.  Industry groups fear firms will relocate to more hospitable states, draining Illinois of the very investment and talent the sector has concentrated in the city. 

CCI argued the law arrived at the worst possible moment, as digital asset businesses are already navigating marketplace disruptions stemming from implementation of Illinois’ own Digital Assets and Consumer Protection Act.

The crypto tax is not the only provision in SB 3019 inviting a courtroom challenge. There was also uproar over accompanying social media and digital advertising taxes in the same bill, citing federal preemption and First Amendment concerns. 

This post Crypto Industry Slams Illinois’ New Digital Asset Tax as ‘Most Punitive’ in U.S. first appeared on Bitcoin Magazine and is written by Micah Zimmerman.


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