On July 1, CFTC Chair Michael Selig issued a statement blasting Illinois lawmakers for passing a 0.2% tax on cryptocurrency transactions. The tax is part of Illinois’ fiscal 2027 budget and is set to take effect on January 1, 2027, covering exchange, transfer, custody, and wallet services provided by brokers.
Selig: Blockchain transformation held back by a state tax
Selig said Illinois lawmakers “slammed the brakes on technological progress.” He argued that blockchains could reshape how value moves across markets, much like the internet changed the flow of information. Tokenized assets may eventually cover commodities, currencies, stocks, and bonds. By taxing crypto transfers differently from other financial activity, Illinois could put its own residents and businesses at a disadvantage.
The CFTC chair also remarked that Illinois legislators “decided they know better” than federal lawmakers who are still crafting national crypto rules. Washington is currently reviewing market structure bills, tax proposals, and agency roles — meaning the Illinois tax could conflict with broader federal attempts to create clear digital asset regulations.
New compliance duties for brokers
Illinois’ Digital Asset Tax Act requires brokers to register with the state’s Department of Revenue before engaging in covered activities. They must collect the tax as a separate line item and file monthly reports. Firms outside Illinois may also be liable if they serve users in the state. Tax advisers have noted that customer records, IP addresses, and other data could determine whether an activity falls under Illinois’ jurisdiction — raising operational questions for exchanges, wallet providers, and custodians.
Industry backlash builds
Earlier, Michael Saylor, co-founder of Strategy (formerly MicroStrategy), called the Illinois tax a “Big Mistake” after Governor JB Pritzker signed the budget. Industry groups warned the law would raise user costs and drive crypto firms away. Critics have focused on the tax base: it applies to the activity itself, not just profits or capital gains. Routine wallet transfers, broker reporting systems, and the differential treatment of digital assets versus stocks, bonds, or derivatives have all drawn scrutiny.
Federal rulemaking moves in parallel
While Illinois pursues its own tax, Congress is weighing broader crypto tax rules. Lawmakers have split the Digital Asset PARITY Act into seven discussion drafts covering stablecoin payments, mining, staking, lending, wash-sale rules, charitable donations, and disclosure duties. The SEC and CFTC have also launched a joint review of derivatives, margining, and market structure. Selig’s criticism frames the Illinois tax as a state-level move that risks clashing with the nascent federal framework for digital assets.