Industry Reacts as Illinois Moves to Tax Crypto Transfers and Custody in New Budget

The crypto industry is pushing back against a new Illinois law that imposes a 0.2% tax on businesses involved in digital asset transactions or custody, though the policy appears unlikely to be changed in the near term.

The law levies a 0.2% charge on “receiving any digital asset business activity,” defined as any exchange, transfer, or storage of digital assets carried out for customers or as part of a business service.

It applies to companies based in Illinois, as well as firms serving Illinois residents, provided they generate at least $100,000 in gross receipts. One person familiar with the process said the measure is expected to raise around $60 million.

The provision was added late to the state’s broader budget bill and signed by Governor J.B. Pritzker on June 16. The budget totals roughly $56 billion for fiscal year 2027 and also introduces additional taxes on sectors including fantasy sports and social media.

Some observers say the wording could extend beyond crypto, potentially capturing broader financial flows such as electronic bank transfers.

It remains uncertain whether amendments can be made soon, as the Illinois legislature is out of session for the remainder of the year. A possible veto session in the fall could provide a narrow opportunity for revisions, but any action is unclear. The tax is set to take effect on January 1, 2027.

Industry critics argue the rule effectively taxes everyday use of digital asset services and unfairly singles out crypto compared with traditional financial instruments like stocks and bonds, which do not face similar transaction-based state taxes.

Some industry participants believe legal action may be the most viable route to challenge the measure, although no lawsuits have been filed so far.

The move also follows significant crypto industry spending in Illinois’ Democratic Senate primary, where it backed Rep. Raja Krishnamoorthi against Governor Pritzker’s preferred candidate, Juliana Stratton, who ultimately won.

Crypto advocacy group Stand With Crypto, backed by Coinbase, has also criticized Stratton’s stance on digital assets, giving her a low rating based on previous comments about crypto-related campaign activity.

Overall, the legislation marks a shift from Illinois’ earlier blockchain-friendly approach, with critics describing it as one of the most aggressive crypto tax measures enacted in the U.S. to date.