The Illinois legislature has passed a budget bill that includes new tax provisions for crypto trading and requires digital asset brokers operating in the state to register. The bill now awaits Governor JB Pritzker's signature to become law.
A 0.2% transaction tax has been included in the budget.
This provision is known as the Digital Asset Privilege Tax Act. According to its content, Illinois proposes to impose a 0.2% tax rate on related crypto transactions and include it in its $56 billion fiscal year 2027 budget.
State budget documents project that this tax revenue could generate approximately $60 million annually. The bill also requires institutions designated as digital asset brokers to register with the state government before facilitating related transactions.
Operating without registration may result in felony charges.
The bill establishes criminal penalties for operating without registration. Organizations that continue to operate without meeting registration requirements after January 1st of next year may face Illinois third-degree felony charges.
Under local law, a third-degree felony can result in two to five years in prison and a fine of up to $25,000. This level of punishment, compared to typical state tax provisions, has provoked a stronger backlash from the crypto industry.
Industry organizations are asking the governor to veto the proposal.
After the bill passed Congress, the Chamber of Digital Commerce and the Illinois Blockchain Association quickly voiced their opposition. In a joint letter, the two organizations urged the governor to veto the provision, arguing that it would harm the development of the local digital asset business.
The organization also stated that the measure lacked sufficient communication with industry participants before being included in the budget, and that no other state in the United States currently has a similar cryptocurrency transaction tax arrangement.
Critics have also focused on the legislative process. They argue that the crypto tax was not debated publicly as a separate bill, but rather pushed forward within a 1,624-page budget.
US crypto tax scrutiny continues to escalate.
This state-level proposal comes as states and Congress across the United States accelerate discussions on digital asset regulation and taxation. At the federal level, the House Ways and Means Committee released seven discussion papers on June 5, covering stablecoin payments, staking yields, mining revenue, DeFi lending, laundering rules, charitable donations, and voluntary disclosure programs.
The committee stated that these draft bills will be discussed at the congressional hearing on June 9, and some of them are derived from the previous PARITY Act and related legislative ideas proposed by Senator Cynthia Lummis.
Additional information:Illinois Governor Pritzker has previously stated publicly that he intends to sign the budget bill. If it is ultimately passed, Illinois will become one of the few state-level jurisdictions in the United States to have a separate tax on cryptocurrency transactions and accompanying criminal penalties.
