‘Anti-crypto law’: Illinois’ 0.2% digital asset tax sparks industry outrage
Crypto leaders warned the new crypto tax laws will push investors and builders elsewhere.
Illinois Governor J.B. Pritzker is facing backlash from the crypto industry after signing a sweeping $55.9B budget on the 16th of June. The budget proposal (Senate Bill 3019) includes new taxes targeting digital asset transactions and related services.
The new 0.2% digital asset privilege tax will be slapped on every transaction and will be effective starting January 2027. However, industry lobby group the Crypto Council for Innovation (CCI) noted that this was the ‘only state in the U.S. to punitively tax’ users.
Unlike traditional tax frameworks that are tied to income, gains, or profits, this law would impose a 0.2% tax on everyday customers’ use of digital asset services such as exchange, transfer, or custody activities.
CCI added that the tax proposal does not offer meaningful exemptions for typical activities, such as transferring crypto between users’ own accounts. All transfers will be slapped with the 0.2% tax. The lobby group warned that the bill will ‘disproportionately burden’ Illinois taxpayers and make crypto less attractive as an investment.
Effectively, if not remedied, the bill will drive crypto builders and investors out of the state, CCI concluded.
Industry leaders’ reactions to Illinois crypto tax law
Marc Andreessen, co-founder of venture firm a16z, said the tax proposal was ‘concerning.’ Similarly, Brian Armstrong reinforced his stance.
For his part, Miles Jennings, chief legal officer at VC firm a16z Crypto, said the tax law was the “most anti-crypto” and “shameful.”
This is one of the most anti-crypto laws in the U.S. It taxes the exchange, transfer, or storage of digital assets—you buy BTC, you pay a tax; you hold your BTC on Coinbase, you pay a tax; and so on.
The industry is pushing to harmonize crypto tax rules. Issues like reporting requirements and double taxation on Bitcoin [BTC] mining and staking have already been raised with Congress. In fact, the House Ways and Means Committee recently reviewed seven crypto tax proposals as part of a broader push to have a unified and smooth federal tax regime for crypto assets.
Still, meaningful progress on crypto tax will take time as lawmakers shift their focus to the November midterm elections.
Final Summary
- Starting in 2027, Illinois new 0.2% digital asset tax will target every transaction, transfer, and custody service.
- Industry leaders warned that the tax proposal is ‘punitive’ and would drive builders and investors away.
