Illinois has enacted a 0.2% tax on digital asset transactions, drawing criticism from the crypto sector over its potential impact and fairness.
The state of Illinois has introduced a controversial 0.2% tax on digital asset transactions, which has sparked significant backlash from the cryptocurrency sector. This tax, included in a $56 billion state budget approved by Governor J.B. Pritzker, applies to businesses engaged in the exchange, storage, or transfer of digital assets for Illinois residents.
New Tax Details and Potential Revenue
The tax will affect companies based in Illinois or those providing services to in-state residents with gross receipts exceeding $100,000. It is estimated to generate around $60 million in revenue. The provision was added to the state budget shortly before its approval on June 16.
Broader Implications and Criticism
Critics have raised concerns that the legislation may extend beyond cryptocurrencies to include various digital transactions, such as electronic bank transfers. The Crypto Council for Innovation has publicly condemned the tax, arguing that it unfairly targets digital asset services without similar taxes on traditional financial transactions like stocks and bonds.
Legislative Future and Industry Response
With the Illinois Senate and House currently out of session for the year, there is uncertainty regarding any potential changes to the tax. A veto session is scheduled for the fall, during which the governor may consider a line-item veto, as requested by the Crypto Council. However, it remains unclear whether such action will be taken.
In response to the tax, discussions about potential legal challenges are underway, though no lawsuits have been filed yet. This tax comes at a time when the crypto industry had shown strong support for Rep. Raja Krishnamoorthi, who opposed Pritzker's preferred candidate in the recent Democratic Senate primary.
Industry groups have expressed discontent with the new tax, contrasting it with previous legislation aimed at fostering blockchain technology. Miles Jennings, from Andreessen Horowitz Crypto, described the new tax as one of the most anti-crypto laws in the country, highlighting the shift in Illinois' approach to digital assets.
