Illinois is moving forward with a 0.2% “privilege tax” on cryptocurrency transactions involving its residents under a recent $55.9 billion budget bill signed into law on Tuesday.
Gov. J.B. Pritzker signed the measure into law despite opposition from cryptocurrency industry groups over the introduction of a transaction tax that applies to all digital asset transactions on any registered platform under a broadly defined “digital asset business activity.”
“This will create an unprecedented tax system that disproportionately burdens Illinoisans for simply using digital assets and will drive innovation and builders out of the state.” – Crypto Council for Innovation he saidcalling on Tuesday for a “point veto” of Art. 3 of Senate Bill No. 3019.
Illinois is home to several well-known cryptocurrency companies, including Zero Hash, Jump Crypto, Bitnomial, and Apex Crypto. A broad-based tax on digital assets could also impact out-of-state companies if they have enough customer activity in the state, According to the American tax company BDO USA.
The measure, which will go into effect on January 1, 2027, will also make Illinois the only state that, unlike classic tax structures, will tax users of digital assets regardless of income, profits or profits. Digital asset brokers operating in the state are also required to register and comply with recent reporting obligations.
CCI Letter to Governor JB Pritzker. Source: CCI
This is like charging e-mail rather than postal mail
The CCI argued that the tax would distinguish digital assets simply on the basis of the technology used to process them.
“Taxing a transaction based on the medium through which it occurs on the blockchain is similar to taxing correspondence because it is delivered by email rather than by post.”
Related: Cryptocurrency tax proposals were considered ahead of Tuesday’s House hearing
They also said the timing is bad because the industry is already adapting to the federal Digital Assets and Consumer Protection Act (DACPA) and Congress is separately working on a national tax framework for crypto assets.
The Digital Chamber sent a similar message letter opposing the Digital Assets Privilege Tax Act on June 3, making similar arguments.
“The tax will discourage the use of digital assets at a time when financial services are moving to blockchain, preventing Illinoisans from progressing and innovating and driving existing IL blockchain and cryptocurrency companies out of the state,” it says.
Crypto is highlighted
Miles Jennings, Head of Policy and General Counsel of a16z Crypto, he said on Wednesday at X that it was one of the most anti-crypto laws in the US.
“There is no comparable state financial transaction tax on stocks, bonds or derivatives across the country,” he said. “This means that cryptocurrencies are being singled out in violation of several federal regulations.”
“Instead of capitalizing on the innovation and cost efficiencies that blockchains can bring to ordinary people in Illinois, the state is ready to punish its entrepreneurs and citizens who seek to use cryptocurrencies.”
The cryptocurrency tax, which was tied to registration and compliance requirements, is part of a much larger package designed to close the budget gap. The bill is expected to generate more than $800 million in recent tax revenue to support Pritzker’s $55.9 billion budget for fiscal year 2027.
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