Illinois has taken a significant step in regulating digital assets by passing a new tax on cryptocurrency transactions. The measure, part of the state’s $56 billion budget, imposes a 0.2% levy on crypto trades and mandates registration for digital asset brokers. Failure to comply could result in Class 3 felony charges, carrying up to five years in prison and $25,000 in fines.
Governor JB Pritzker is expected to sign the bill, which legislators approved along party lines. The tax is projected to generate around $60 million annually. However, industry groups like the Digital Chamber and Illinois Blockchain Association have voiced strong opposition. They argue that the proposal was rushed through without stakeholder input and could stifle innovation. In a joint letter, they urged the governor to reject the measure, noting that no other state has enacted a similar tax.
The legislation defines a digital asset broker as any entity facilitating covered crypto transactions. Brokers must register with the state or face criminal penalties. Critics point out that the tax was embedded in a 1,624-page budget bill rather than debated as standalone legislation, limiting public scrutiny.
This development comes amid broader federal and state efforts to regulate digital assets. New York and Illinois have recently banned state employees from using nonpublic information in prediction markets. Meanwhile, the U.S. House Ways and Means Committee is considering several crypto tax proposals, including rules for staking rewards, mining income, and decentralized finance lending. Governor Pritzker has indicated he will sign the budget, but the crypto tax provision remains controversial.