Crypto industry groups warned a new Illinois tax on digital asset activity could raise costs for consumers and create new compliance burdens for exchanges and custodians.
The Digital Asset Privilege Tax Act, which was signed into law on 16 Jun by Governor J.B. Pritzker, imposes a 0.2% tax on customers who receive crypto-related services such as the exchange, transfer or custody of digital assets from 1 Jan 2027. The tax is based on the value of the underlying asset and must be collected and remitted by brokers.
"Digital asset brokers shall collect the tax from customers by adding the tax to the amount of the purchase price received from the customer for the digital asset business activity subject to tax under this Act," reads the Act.
Customer levy
The measure has drawn criticism from the Crypto Council for Innovation (CCI), the Illinois Blockchain Association and other industry groups, which argue the law increases the cost of using digital asset services in the state.
"If enacted, the Digital Asset Privilege Tax Act would position Illinois as the only state in the country to punitively tax Illinois customers for simply receiving covered digital asset business activity," CCI wrote in a letter sent to Pritzker before he signed the legislation.
Industry impact
The law applies to digital asset brokers with a physical presence in Illinois as well as out-of-state firms that generate at least $100,000 in annual receipts from Illinois customers. That means the measure could affect not only Chicago-based crypto firms such as Cumberland and Jump Crypto, but also national exchanges, custodians and brokerage platforms serving Illinois residents.
Miles Jennings, general counsel at a16z crypto, described the legislation as "one of the most anti-crypto laws in the US" in an X post, arguing Illinois was imposing a tax on digital asset transactions without a comparable levy on stocks, bonds or derivatives.
"You aren’t taxed if you exchange a stock, bond, or derivative in paper form, but you are taxed if they happen to be recorded on a blockchain? That’s like taxing email," he wrote. His comments suggest the law could face legal challenges from crypto firms or trade groups before it takes effect in 2027.
The Illinois Blockchain Association and The Digital Chamber warned the provision could trigger a "mass exodus" of digital asset businesses from Illinois. Bloomberg Tax reported that the measure is expected to generate about $60mn in annual revenue for the state.
Regulatory contrast
The backlash comes less than a year after Pritzker signed two crypto-focused laws that his administration described as establishing some of the Midwest's first comprehensive safeguards for digital asset users.
The Digital Assets and Consumer Protection Act gave Illinois regulators authority to supervise crypto exchanges and other digital asset businesses, while the Digital Asset Kiosk Act imposed new requirements on crypto ATM operators, including refund protections for fraud victims. State officials said the measures were necessary after Illinois residents lost $272mn to cryptocurrency-related fraud in 2024.
At the time, Pritzker explicitly framed it as a response to what he described as federal deregulation of crypto and said Illinois was implementing "common-sense protections for investors and consumers."
Illinois has also become a focus of the crypto industry's growing political spending machine. Crypto-backed political action committees have spent millions of dollars in Illinois federal races during the 2026 midterm cycle, part of a broader effort to elect candidates viewed as supportive of digital asset legislation.
