Illinois Governor JB Pritzker has officially enacted a new tax on cryptocurrency transactions following the signing of Senate Bill 3019 on Tuesday. The legislation introduces a 0.2% tax on the value of digital asset transactions, a move that has quickly faced backlash from advocates within the cryptocurrency community. These advocates have urged the Governor to reconsider this provision, emphasizing its potential negative impact on the state’s digital asset industry.
The tax is expected to contribute more than $800 million to the state’s budget for fiscal year 2027, which totals approximately $55.9 billion. This measure is part of a broader package of new tax initiatives aimed at generating revenue, which includes taxes on digital advertising, sports betting, and social media, in addition to the new cryptocurrency tax.
The Digital Asset Privilege Tax Act will take effect on January 1, 2027, imposing a tax specifically on digital asset business activities. The legislation states that a 0.2% tax applies to transactions involving digital assets, and it mandates that brokers facilitate the collection of this tax. Additionally, the law stipulates that out-of-state brokers will also be subject to the tax once their sales in Illinois surpass $100,000.
The implications of this new law extend beyond just taxation; the legislation places heightened registration and reporting requirements on digital asset brokers, with non-compliance potentially resulting in a Class 3 felony charge.
The Crypto Council for Innovation (CCI) has expressed strong opposition to this move, arguing that it could deter investment and innovation in the state. The CCI has requested that Governor Pritzker veto the specific tax provision, asserting that such a punitive tax structure might stifle digital asset activity in Illinois. They voiced concerns that the tax overwhelmingly targets cryptocurrency without similar burdens being placed on traditional financial instruments like stocks and bonds.
Concerns are further heightened by the possibility that firms based in Chicago, such as Jump Crypto and Bitnomial, could be compelled to relocate to more crypto-friendly states. This sentiment was echoed by Miles Jennings, Head of Policy and General Counsel at a major investment firm, who likened the tax levied on digital assets to taxing email.
The discontent regarding the tax has also attracted interest from broader industry groups like NetChoice, which is advocating against additional taxes on social media and digital advertising as they believe these measures may conflict with federal regulations. With legal challenges looming ahead of the rules taking effect in 2027, the future of the legislation remains uncertain as the debate over the impact of this tax continues to gain momentum.
