Illinois Enacts 0.2% Tax on Crypto Transactions, Prompting Industry Backlash

Illinois has enacted a bill imposing a 0.2% tax on cryptocurrency transactions and related services.

The Block reported on June 17 that Illinois Governor JB Pritzker recently signed the Digital Asset Tax Act, or DATA. The law will take effect on Jan. 1, 2027. It requires service providers such as crypto exchanges, custodians and brokers to collect and remit the tax on customer transactions.

The measure has drawn mounting criticism from the industry. The Crypto Council for Innovation, the Digital Chamber and the Illinois Blockchain Association say the law unfairly targets the digital-asset sector. The Crypto Council for Innovation called DATA an unprecedented tax regime that places an excessive burden on digital-asset users and could drive innovative companies and developers out of Illinois.

Industry groups have also raised concerns about the law's unclear scope. The Digital Chamber said it is unclear whether wallet-to-wallet transfers, crypto-to-crypto swaps or the use of custody services could also be taxed. The group added that the levy could apply to the full value of an asset even when no profit is made or when a transaction results in a loss.

Miles Jennings, general counsel and head of decentralization policy at Andreessen Horowitz, also described DATA as one of the most anti-crypto bills in the US. He said even buying Bitcoin or holding it on an exchange could fall within the tax's scope. With no similar financial transaction tax in stock or bond markets, he said, the measure appears to single out the crypto industry.

The law applies to exchanges, platforms and wallet service providers that have a place of business in Illinois or generate at least $100,000 in annual revenue in the state. Industry participants are calling for clearer standards on the scope of taxation and how the law will be applied as implementing rules are drafted.