Illinois Governor Signs Crypto Transaction Tax

Industry groups criticize the tax design

Crypto Council for Innovation opposed the measure and urged Governor JB Pritzker to use a “line-item veto” against Article 3 of Senate Bill 3019. The group said 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.”

Crypto Council for Innovation said the tax singles out digital assets based on the technology used to process a transaction, not the economic substance of the transaction itself. “Taxing a transaction based on the medium through which it happens to occur on a blockchain is akin to taxing correspondence because it is delivered by email rather than by post,” the group said.

Crypto Council for Innovation also said the timing is poor because the industry is already adjusting to the federal Digital Assets and Consumer Protection Act while Congress is separately working on a national crypto tax framework.

The Digital Chamber sent a letter opposing the Digital Asset Privilege Tax Act on June 3. The group said the tax could discourage blockchain adoption just as financial services are moving toward blockchain rails.

“The tax will discourage the use of digital assets at the very time when financial services are moving to the blockchain, freezing Illinois residents out of progress and innovation and pushing the existing IL blockchain and crypto companies out of the state,” The Digital Chamber said.

The Illinois Digital Chamber warned on June 3 that “it is also unclear how the Tax will work.” The group said a digital asset business or its customers could be taxed at 0.2% of full asset value when they “merely transfer assets between wallets, convert one digital asset to another, or place assets in custodial storage,” even when no economic gain is realized and even when a loss occurs.

The law is not designed to tax peer-to-peer transactions, including direct wallet-to-wallet transfers between individuals or onchain use cases that bypass centralized service providers. Industry groups still warned that the language leaves uncertainty around how the tax will work in practice.

Several industry groups opposed the law, including Crypto Council for Innovation, The Digital Chamber, Illinois Blockchain Association and other crypto representatives. Industry advocates described the measure as “the most punitive digital asset tax in the country.”

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Illinois crypto firms and out-of-state companies may be affected

Illinois is home to several known crypto companies, including Zero Hash, Jump Crypto, Bitnomial and Apex Crypto. The law could also affect out-of-state companies if they have sufficient customer activity in Illinois, according to U.S. tax firm BDO USA.

The law covers exchanges, custodians, platforms, wallet services and other businesses that either have a physical presence in Illinois or generate more than $100,000 in annual gross receipts from Illinois customers. That threshold could bring smaller and mid-sized crypto businesses into the compliance perimeter, not only large trading platforms.

Miles Jennings, head of policy and general counsel for a16z Crypto, said on X on Wednesday, June 17, 2026, that the measure was “one of the most anti-crypto laws in the US.”

“There is effectively no comparable state financial transaction tax on stocks, bonds or derivatives anywhere in the country,” Jennings said. “That means crypto is being singled out in violation of several federal laws.”

Jennings argued that the law effectively taxes basic crypto actions, including the exchange, transfer or storage of digital assets. He said that buying BTC, holding BTC on Coinbase or similar activities could trigger tax exposure under his interpretation.

“Rather than embracing innovation and the cost efficiencies blockchains can deliver for ordinary people in Illinois, the state is poised to punish its entrepreneurs and citizens that want to use crypto,” Jennings said.

The measure could increase user costs if platforms pass the tax through to Illinois customers. It could also force businesses serving Illinois customers to weigh compliance costs, tax collection duties and reporting obligations against the value of operating in the state.

The law may create uncertainty for companies that serve Illinois residents from outside the state. Its reach depends partly on customer activity and business nexus, including the annual gross receipts threshold for Illinois customers.

Broker-rule comparison adds federal policy backdrop

The measure has been compared to the controversial IRS “broker rule” because it is structured as a privilege tax on brokers and other service providers, expanding obligations on crypto intermediaries.

The IRS broker rule was passed as part of the 2021 Infrastructure Investment and Jobs Act and imposed broad information-reporting obligations on entities “effectuating” digital asset sales, including exchanges, service providers, many DeFi platforms, software providers and decentralized actors.

Crypto groups had criticized the broker rule as unworkable, privacy-invasive and harmful to innovation. Congress repealed it in 2025 through a bipartisan decision under the Congressional Review Act.

Governor JB Pritzker signed the Digital Assets and Consumer Protection Act and Digital Asset Kiosk Act in 2025. Those measures created Midwest-first rules for exchanges, businesses and crypto ATMs.

The Digital Chamber said those earlier laws “reflected industry input and numerous compromises that vastly improved the final product.” The group contrasted those measures with the new digital asset privilege tax.

“By contrast, [DATA] epitomizes the discriminatory treatment of the digital asset industry and the shortsighted policymaking that could drive innovators out of Illinois. A first-of-its-kind tax targeting an entire industry demands meaningful engagement with those it directly affects,” The Digital Chamber said.

The new law creates a different policy fight from the earlier consumer-protection measures. The earlier rules were described by The Digital Chamber as improved through industry compromise, while the new tax was described by critics as a first-of-its-kind measure targeting an entire sector.

Governor JB Pritzker did not provide a direct statement defending the crypto tax specifically. The tax sits inside a larger fiscal package designed to raise revenue.

The measure is not yet in effect. It was signed in June 2026 and is scheduled to begin on Jan. 1, 2027.

The measure is not a capital-gains tax. It is described as a digital asset privilege tax, transaction-style charge or charge on digital asset transactions and services.