The Illinois General Assembly has enacted a fiscal year 2027 budget bill that establishes a new tax on cryptocurrency transactions, specifically aimed at digital asset brokers operating in the state.
Summary
- Illinois lawmakers have sanctioned a budget bill, incorporating a 0.2% tax on crypto transactions and instituting new registration requirements for digital asset brokers.
- Failure to comply with registration can lead to Class 3 felony charges for brokers, carrying potential penalties of up to five years in prison and $25,000 in fines.
- Organizations within the industry, such as the Digital Chamber and Illinois Blockchain Association, are pressing Governor JB Pritzker to veto this legislation.
This initiative is part of the state’s $56 billion budget proposal, which features a 0.2% tax on cryptocurrency transactions as detailed in the Digital Asset Privilege Tax Act. The bill passed along party lines on Monday and is now awaiting Governor JB Pritzker’s signature to become law.
State budget forecasts indicate that the tax could yield approximately $60 million in revenue. As per this proposal, any entity recognized as a digital asset broker must register with the state before facilitating any relevant crypto transactions.
Non-compliance may lead to serious legal repercussions. The legislation stipulates that brokers failing to register by January 1 could incur Class 3 felony charges, which in Illinois may result in prison sentences of two to five years and hefty fines of up to $25,000.
Opposition from Industry Groups
Opposition emerged promptly following the legislature’s approval of the bill. In a joint statement released on Wednesday, the Digital Chamber and Illinois Blockchain Association urged state officials to reject the Digital Asset Privilege Tax Act, contending that it would adversely impact the local digital asset industry.
The organizations voiced that the legislation was introduced without sufficient consultation with industry stakeholders and emphasized that no other state currently imposes a similar tax on cryptocurrency transactions.
Moreover, the Digital Chamber raised concerns regarding the rapid integration of the tax into the budget without proper notice to stakeholders. They described the tax as potentially detrimental to economic growth and recommended its removal prior to final approval.
Critics have also pointed out procedural issues, asserting that the crypto tax was obscured within a 1,624-page budget bill, instead of being debated as an independent issue.
Heightened Scrutiny of Digital Assets by States and Congress
The Illinois tax initiative arrives at a time when policymakers nationwide are intensifying their scrutiny of digital asset regulation and tax policies.
Earlier this year, Governor Pritzker issued Executive Order 2026-04, prohibiting Illinois state employees from using nonpublic information obtained during official duties for trading in prediction market contracts or aiding others in such trades. The governor’s office noted that this action aimed to strengthen ethical safeguards with the rise of prediction markets.
A similar measure was enacted in New York the following day, with Governor Kathy Hochul signing Executive Order 60, which also restricts state officials from misusing confidential government information for personal gain in prediction markets and allows for disciplinary actions against violators.
Additionally, federal lawmakers are reviewing various proposals for crypto taxation. On June 5, the U.S. House Ways and Means Committee released seven discussion drafts covering a variety of topics including stablecoin payments, staking rewards, mining income, DeFi lending, wash-sale rules, charitable donations, and voluntary disclosure programs for crypto taxpayers.
The committee intends to hold discussions on these proposals during a congressional hearing on June 9, referencing insights from the PARITY Act and legislation introduced by Senator Cynthia Lummis.
Governor Pritzker has publicly expressed his intention to sign Illinois’ budget package, although the measure had not received final approval as of Friday morning.
