Illinois Crypto Tax Sparks Industry Backlash and Court Challenge

The state of Illinois has introduced a digital asset tax, known as the Digital Asset Tax Act, which will impose a 0.2% levy on digital asset transactions starting from January 1, 2027.

The law aims to raise around $60 million in revenue per year, but it has sparked opposition from the crypto industry. The Digital Chamber, a national trade group, has filed a lawsuit seeking to void and block enforcement of the law before its effective date.

Regulatory criticism has also come from Michael Selig, Chair of the Commodity Futures Trading Commission, who said that lawmakers had 'slammed the brakes on technological progress' by passing the measure. Additionally, a repeal bill (HB 5798) has been introduced in Springfield to abolish the Digital Asset Tax Act outright.

The tax will likely affect market structure and liquidity, with potential consequences for traders and builders in Illinois. Retail traders may see an increase in costs due to the new tax, while active desks and startups may need to adapt their strategies to minimize losses.