Illinois Imposes New Tax on Crypto Activity, Industry Pushes Back
Illinois is set to impose a levy on crypto activity and custody starting in 2027, drawing criticism from the industry. The move could point to a broader trend in digital asset taxation.
Key Takeaways
- Illinois will introduce a 0.2% tax on crypto activity and digital asset custody for customers starting January 1, 2027.
- The levy applies to companies with at least $100,000 in revenue from digital asset business and could bring the state about $60 million a year.
- The crypto sector is criticizing the move as unique and unfair, and some firms are considering legal action.
The state of Illinois has passed a new tax law that imposes a 0.2% levy on companies that carry out crypto activity or store digital assets for customers in the state. The measure, which takes effect on January 1, 2027, is facing heavy criticism from the crypto industry.
What the New Tax Means and Its Impact
The tax applies to companies based in Illinois or those serving state residents, as long as they generate at least $100,000 (€86,300) in revenue from digital asset business. The levy targets each individual transaction where digital assets are exchanged, transferred, or stored on behalf of customers. According to estimates, the tax could bring in about $60 million (€51.8 million) a year for Illinois.
The law was added at the last minute to the broader fiscal year 2027 budget bill, which also includes new taxes on things like fantasy sports and social media. Governor J.B. Pritzker signed the bill on June 16, despite objections from the industry.
Reactions From the Crypto Sector
The Crypto Council for Innovation (CCI) strongly criticized the measure. It says this tax is unique to crypto and has no equivalent in traditional financial instruments like stocks, bonds, or derivatives. According to CCI, the law puts a tax on daily customer transactions rather than on profits or income, which it says could lead to unfair treatment of crypto compared with other markets.
There are also concerns that the new tax could discourage companies from doing business in Illinois because of the extra costs and administrative burden. Several parties are considering legal action to challenge the tax, although no lawsuit has been filed yet.
Why This Matters for the European Crypto Market
Even though this tax is specific to Illinois, it could be a signal for other regions thinking about taxing digital asset transactions. European crypto investors and companies may see it as an example of how regulation and taxation in the sector are evolving, which could affect international trading flows and where firms choose to set up shop.
The debate fits into a broader wave of U.S. policy discussions about crypto taxes and oversight. In Washington, digital asset taxes and market supervision were also recently discussed in the summer of crypto regulation.
