Illinois has opened a modern front in state-level cryptocurrency regulation after Gov. J.B. Pritzker signed a budget package that included a digital asset tax bill, a measure that industry groups are already attacking as one of the strictest taxes on crypto transactions in the United States.

TL;DR

• The act introduces a privilege tax of 0.2% on transactions of digital asset brokers.
• The effective date in the source package is January 1, 2027.
• “Most Punishable” should be attributed to a criticism of the industry, not a statement of neutral fact.

Digital Assets Tax Act…

— Crypto Council for Innovation (@crypto_council) June 17, 2026

What does tax do in Illinois

The verified source package shows that the digital asset tax bill is part of Illinois’ $55.9 billion budget package. This measure introduces a privilege tax of 0.2% on digital asset broker transactions, effective from January 1, 2027.

The law applies to digital asset brokers whose client or broker is based in Illinois, with an inflows threshold of $100,000 for out-of-state brokers. This means that the tax’s reach may extend beyond companies physically based in a given state, depending on the customer’s location and transaction activity.

Why the industry is retreating

The Crypto Council for Innovation and other industry voices sharply criticized this solution. The designation “most punitive” should be considered propaganda language rather than an objective legal classification, but the rejection itself is newsworthy because it shows how quickly state-level policy can become the focus of domestic industry.

Crypto companies will likely argue that transaction-based taxes raise costs, reduce competitiveness, and create compliance complexity. If other states copy this model, brokers could face a patchwork of state-specific digital asset regulations on top of federal obligations.

A test case for state-level regulation

The Illinois measure also highlights that crypto policy is no longer solely a federal issue. Even as Congress debates stablecoins, market structure, and CBDCs, individual states are experimenting with tax and licensing approaches that could directly impact exchanges, brokers, and users.

This creates strategic pressure on crypto companies. They must keep track of not only SEC, CFTC, and federal regulations, but also state budgets, tax packages, and consumer protection laws, which may include digital asset regulations.

What will happen next?

The next question is whether the industry challenges the tax, seeks amendments before the effective date, or pushes for federal preemption in future market structure legislation. Firms serving Illinois clients may also need to evaluate how revenue threshold and broker location regulations apply to their business.

For now, Illinois has given the market a concrete example of how states can directly tax digital asset activity. Whether this remains an isolated incident or becomes a template will have implications far beyond Illinois.

This report is based on information from Position of the 10th Crypto Council

This article was written by the News Desk and edited by Samuel Rae.