Illinois has approved a new 0.2% tax on cryptocurrency transactions that state officials estimate could generate up to $60 million annually, drawing public criticism from Strategy co-founder Michael Saylor and several industry groups.
summary
- Michael Saylor called Illinois’ new 0.2% cryptocurrency transaction tax a “huge mistake” after it became law.
- Industry groups have warned that the tax could hurt cryptocurrency companies and push innovation out of Illinois.
- The law requires broker registration and monthly reporting and applies to certain out-of-state businesses serving Illinois users.
On June 17 mailSaylor called Governor J.B. Pritzker’s decision to sign the Digital Asset Franchise Tax Act into law a “huge mistake.” Measure that It takes effect On January 1, 2027, it imposes a 0.2% tax on covered digital asset transactions, including transfers between wallets.
State lawmakers approved the tax as part of Illinois’ budget package. Along with the cryptocurrency provisions, the legislation also includes a 1.75% tax on sports bets placed through prediction market platforms such as Polymarket.
The law arrives as lawmakers in Washington continue to debate taxing digital assets at the federal level. Earlier this month, the House Ways and Means Committee Released Seven discussion drafts covering different aspects of cryptocurrency tax policy.
Industry groups warn that the law may push companies away
Opposition to the Illinois measure began shortly after the legislature approved it. In a joint letter, the Digital Chamber and the Illinois Blockchain Association urge State officials rejected the proposal, arguing that it could hurt the state’s digital assets sector.
According to the groups, no other US state currently imposes a similar tax on cryptocurrency transactions. They also criticized the legislative process, noting that the proposal was included in the 1,624-page budget bill rather than introduced as standalone legislation.
Separately, the Cryptocurrency Innovation Council sent a letter to Governor Pritzker requesting a veto. The organization said that the tax departs from traditional tax systems because it applies to the digital asset activity itself rather than gains, profits or income.
The CCI also stated that the legislation does not include exceptions for routine transactions or a minimum threshold that would exempt small transfers from tax. The group warned that the framework could place a significant burden on Illinoisans using digital assets and discourage companies from building in the state.
Adding to these concerns, Miles Jennings, head of policy and general counsel at a16z Crypto, wrote that “there is no comparable government financial transaction tax” on stocks, bonds or financial derivatives anywhere in the United States.
Brokers face new registration and reporting requirements
Beyond the tax itself, the legislation creates new compliance obligations for digital asset brokers.
According to tax consulting firm BDO, the rules could apply not only to Illinois-based companies but also to out-of-state brokers who generate at least $100,000 in annual revenue from Illinois clients.
BDO male State sourcing bases are broad and may be based on customer location data, account records, mailing addresses, IP addresses, or other indicators that show Illinois as a primary location of usage.
By law, brokers must collect the tax as a separate item, keep records, and submit monthly reports covering the previous month’s activity. Registration requirements must also be completed before the start date of January 1, 2027, with registrations automatically renewing unless canceled or revoked.
Compliance questions remain unresolved. Commenting on the legislation, Attorney Joe Carlasari cited uncertainty around wallet transfers and sales, and questioned whether transferring Bitcoin from self-custody to Coinbase and selling it immediately would trigger one or two taxable events.
Illinois’ action also intensified existing tensions between the state and parts of the cryptocurrency industry. Illinois is already facing A.J lawsuit From the Commodity Futures Trading Commission (CFTC) on prediction markets after government regulators tried to restrict platforms including Polymarket and Kalshi.
With the tax now signed into law, attention has shifted from the legislative debate to how brokers and users can prepare for the new rules before 2027.
