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Illinois is going ahead with a 0.2% "privilege tax" on crypto transactions involving its residents under a new $55.9 billion state budget bill signed Tuesday.Governor JB Pritzker signed the measure despite opposition from crypto industry groups over the provision, a transaction tax that applies to all digital asset transactions on any registered platform under broadly termed “digital asset business activity.”“This will create an unprecedented tax regime that disproportionately burdens Illinois residents for simply using digital assets and will drive innovation and builders out of the state,” the Crypto Council for Innovation said, as it urged a “line-item veto” of Article 3 of Senate Bill 3019 on Tuesday.Illinois is home to several well-known crypto companies, including Zero Hash, Jump Crypto, Bitnomial, and Apex Crypto. The wide-reaching digital asset tax could also impact out-of-state companies if they have sufficient customer activity in the state, according to US tax firm BDO USA.The measure, which takes effect on Jan. 1, 2027, will also make Illinois the only state to tax digital asset users regardless of income, gains or profits, unlike traditional tax structures. Digital asset brokers operating in the state are also required to register and comply with new reporting obligations.Letter from the CCI to Governor JB Pritzker. Source: CCIAkin to taxing email rather than postThe CCI argued the tax would single out digital assets simply based on the technology used to process them.&nbsp;“Taxing a transaction based on the medium through which it happens to occur on a blockchain is akin to taxing correspondence because it is delivered by email rather than by post.”Related: Crypto tax proposals weighed ahead of Tuesday House hearingThey also said the timing is poor, since the industry is already adjusting to the federal Digital Assets and Consumer Protection Act (DACPA) and Congress is separately working on a national tax framework for crypto assets.The Digital Chamber sent a similar letter opposing the Digital Asset Privilege Tax Act on June 3 with similar arguments.“The tax will discourage the use of digital assets at the very time when financial services are moving to the blockchain, freezing Illinois residents out of progress and innovation and pushing the existing IL blockchain and crypto companies out of the state,” it read.Crypto is being singled outMiles Jennings, head of policy and general counsel for a16z Crypto, said on X on Wednesday that it was one of the most anti-crypto laws in the US.“There is effectively no comparable state financial transaction tax on stocks, bonds or derivatives anywhere in the country,” he said. “That means crypto is being singled out in violation of several federal laws.”“Rather than embracing innovation and the cost efficiencies blockchains can deliver for ordinary people in Illinois, the state is poised to punish its entrepreneurs and citizens that want to use crypto.”The crypto tax, which was bundled with registration and compliance requirements, is one piece of a much larger package built to close a budget gap. The bill is expected to raise more than $800 million in new tax revenue to support Pritzker’s $55.9 billion budget for fiscal 2027.Magazine: China’s 107 Bitcoin memory thief, Bithumb CEO booked: Asia Express

Illinois governor approves crypto transaction tax despite industry uproar

Cointelegraph

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