Skip to content
- Illinois introduced a 0.2% crypto transaction tax, drawing industry criticism.
- Industry groups warn new tax could burden everyday crypto users.
- Legal experts question Illinois treatment of digital assets versus stocks.
Digital asset transactions in Illinois are now taxed at 0.2%, as SB 3019 was recently signed into law, but has faced criticism from crypto groups and legal experts who see it as an additional burden on cryptocurrency users. This week, Gov. J.B. Pritzker signed the bill into law, making Illinois the first U.S. state to have a standalone tax for digital asset transactions. It is contained in one of the law’s clauses, the Digital Asset Privilege Tax Act (DAT), Article 3.
The new framework will apply to a variety of digital asset activities and critics claim it could even apply to “the average consumer’s common transactions.” Industry groups have voiced concerns that the law doesn’t offer broadly applicable exemptions for common non-commercial activities, such as transfers between personal wallets. The law establishes a tax regime for cryptocurrencies that is unlike any other in the world and treats crypto users differently from those in the traditional financial markets, according to the Crypto Council for Innovation (CCI).
The organization explained that the area’s inhabitants could be charged additional costs simply because they are using blockchain based assets. Additionally, it pointed out that the bill may chill innovation and the growth of business in the state’s growing digital asset sector.
Also Read: XRP Whales Added 1.53 Billion Coins as Holdings Reach 74.1% Share
Industry Groups Challenge Scope of New Tax Framework
CCI likened the measure to taxing e-mail messages since they are not sent via traditional postal service. The group contended that the law does not target the transaction, but the technology used. In a public statement, the organization is challenging the applicability of the law to so many activities that many digital asset users conduct on a regular basis. Thus, the industry players have been concerned about the compliance burden to be further increased on both individuals and industries.
It’s not just industry associations that are being criticized. The bill is one of the most restrictive state-level digital assets laws in the U.S., says crypto attorney Miles Jennings. The law applies to the exchange, transfer and storage of digital assets, Jennings said. He claimed that taxes might be imposed for users when buying cryptocurrency, transferring assets, or holding cryptocurrency on some platforms.
Legal Questions Emerge as Debate Intensifies
In addition to the tax rate, some commentators have voiced concerns about whether digital assets are being discriminated against. No state financial transaction tax (STFT) exists on stocks, bonds or derivatives, Jennings said. Plus, the bill is specifically aimed at digital assets and could be subject to a lawsuit, he said.
Industry groups and legal professionals have already started to object to the 0.2% crypto transaction tax, which was implemented in Illinois as soon as it was introduced. The new framework is being developed under the auspices of state authorities, but some are worried that it may result in increased costs for customers and potential barriers to the adoption and innovation of digital assets.
Also Read: Ripple and Flutterwave Unite to Advance RLUSD Cross-Border Payments
