Illinois Unveils Draft Crypto Tax Rules: Stablecoins and DeFi in the Crosshairs

Illinois has published draft rules for its 0.2% digital asset transaction tax, which is set to take effect on January 1, 2027. The tax targets various crypto activities, including stablecoin transactions and decentralized finance (DeFi) platforms.

The new rules clarify that stablecoins are considered digital assets subject to the tax, while nonfungible tokens are exempt. DeFi transactions would generally be exempt unless users pay fees considered 'valuable consideration', such as protocol fees collected for operating or maintaining a platform.

The rules also identify crypto bridging as taxable exchange activity when conducted through a digital asset broker for consideration. Transfers from centralized exchanges to self-custody wallets could also be taxed when the exchange charges a fee.