Crypto Industry Reacts With Alarm to Illinois Tax on Digital Asset Holdings and Transfers

A newly introduced 0.2% levy on business activity involving digital assets was inserted into Illinois’ budget at the last minute and is unlikely to be revised in the near term, according to two people familiar with the situation.

The crypto industry has strongly criticized the measure, which applies a 0.2% tax to companies that transact, transfer, or store digital assets on behalf of customers in Illinois. However, industry participants say the window for altering the provision in the short term appears limited.

Under the legislation, the tax is imposed on “receiving any digital asset business activity,” defined as any instance of exchanging, transferring, or custodying digital assets in a business context. It applies to firms operating in Illinois or serving state residents with at least $100,000 in gross receipts, and is projected to generate roughly $60 million in revenue.

The provision was reportedly added late in the budget negotiation process and was signed into law by Governor J.B. Pritzker on June 16. The broader budget package totals about $56 billion for fiscal year 2027 and also introduces new taxes on sectors such as fantasy sports and social media.

Some legal experts have raised concerns about the scope of the law, suggesting it could extend beyond cryptocurrencies to include broader forms of digital financial transfers, including certain electronic banking transactions.

It remains unclear whether lawmakers will revisit the issue soon, as the Illinois legislature is not expected to be in regular session for the remainder of the year. While a veto session in the fall could offer an opportunity for changes through a line-item veto, it is uncertain whether the governor would pursue that route. The tax is scheduled to take effect on January 1, 2027.

Industry groups, including the Crypto Council for Innovation, argue that the tax unfairly targets digital asset services by imposing transaction-based costs not applied to comparable financial products such as stocks or bonds. They contend the measure effectively picks winners and losers within the financial system.

Some observers believe the most viable path to challenging or overturning the tax may be through litigation, with discussions already underway, though no lawsuits have been filed so far.

The policy shift comes shortly after a contentious political backdrop in Illinois, where the crypto industry spent heavily in support of a Senate candidate opposing Governor Pritzker’s preferred pick in the Democratic primary. That race ultimately resulted in victory for Lieutenant Governor Juliana Stratton.

Crypto advocacy group Stand With Crypto, backed by Coinbase, previously gave Stratton a low rating on digital asset policy based in part on her public criticism of crypto-backed spending in the race.

The new tax stands in contrast to Illinois’ earlier blockchain legislation, which was viewed more favorably by industry participants. Critics, including Andreessen Horowitz’s crypto policy head Miles Jennings, described the budget provision as one of the most aggressive anti-crypto measures enacted in the United States.