Illinois just put a 20-basis-point toll booth on every crypto transaction 🚧

Illinois Governor JB Pritzker signed a $55.9 billion state budget on Tuesday that creates a 0.2% "privilege tax" on digital asset transactions, drawing formal objections from the Crypto Council for Innovation, the Digital Chamber, and a16z Crypto over a provision they say singles out the crypto industry. Under Senate Bill 3019's Article 3, digital asset brokers operating in Illinois must register with the state and comply with new reporting requirements, with the tax itself taking effect in January 2027. The Crypto Council for Innovation argued the measure would "create an unprecedented tax regime that disproportionately burdens Illinois residents for simply using digital assets and will drive innovation and builders out of the state," and urged Pritzker to issue a line-item veto of the article before signing.

The tax applies to exchange, transfer, and custody activity on any registered platform engaged in "digital asset business activity," and according to tax advisory firm BDO USA could reach out-of-state platforms with sufficient customer activity in Illinois. CCI said Illinois would become the only U.S. state to tax digital asset users regardless of income, gains, or profits, with no meaningful exemption for transfers between a user's own wallets. The group compared the structure to "taxing correspondence because it is delivered by email rather than by post" and said the timing is poor as the industry adjusts to the federal Digital Assets and Consumer Protection Act (DACPA) and Congress weighs a national crypto tax framework.

Industry executives publicly criticized the move. a16z Crypto's Miles Jennings wrote on X on Wednesday that the law is "one of the most anti-crypto laws in the U.S.," adding that "there is effectively no comparable state financial transaction tax on stocks, bonds or derivatives anywhere in the country" and that "crypto is being singled out in violation of several federal laws." a16z co-founder Marc Andreessen called the proposal "concerning," while Coinbase CEO Brian Armstrong also voiced opposition. The Digital Chamber sent a separate letter on June 3 opposing the Digital Asset Privilege Tax Act, warning it would "discourage the use of digital assets at the very time when financial services are moving to the blockchain."

Illinois is home to crypto firms including Zero Hash, Jump Crypto, Bitnomial, and Apex Crypto. CCI framed the dispute as part of a broader push to harmonize crypto tax rules, pointing to recent House Ways and Means Committee review of seven crypto tax proposals and ongoing concerns about reporting requirements and double taxation on $BTC mining and staking. With meaningful federal progress unlikely before the November midterm elections, Illinois has nonetheless moved ahead with the first statewide transaction-level levy on digital assets in the country.