Illinois Slaps 0.2% Crypto Transaction Tax, Raising Eyebrows Among Industry Giants
The state of Illinois is set to become one of the first in the US to impose a tax on cryptocurrency transactions, effective January 1, 2027. The Digital Asset Tax Act (DATA) mandates a 0.2% transactional 'privilege tax' based on the gross value of digital assets, including crypto conversions and basic custodial storage.
This move marks a departure from federal IRS rules, which treat cryptocurrencies as property subject to capital gains taxes. Illinois' new law requires mandatory state registration for all crypto service providers operating within the state or earning over $100,000 annually from its residents. Failure to comply will constitute a Class 3 felony.
The proposed tax has sparked intense debate, with supporters arguing that it's a necessary revenue stream and opponents warning of potential economic consequences. Crypto giants have joined forces to block the law, calling it 'discriminatory' and 'the most punitive' in the US. Venture capitalist Andreessen Horowitz (a16z) warns that DATA creates a double taxation system, while Strategy's Michael Saylor fears it could dry up the state's liquidity.