Illinois tax officials have released draft rules that explain how the state’s already-enacted 0.2% digital asset transaction tax would apply across several parts of the crypto market, including stablecoins, DeFi activity, crypto bridging and some transfers to self-custody wallets. The proposal says stablecoins would count as taxable digital assets, while nonfungible tokens would sit outside the tax’s scope. It also draws lines around DeFi usage: transactions are generally exempt, but taxes could apply when users pay fees deemed "valuable consideration," such as protocol fees tied to operating or maintaining a platform. By contrast, network fees and swap fees paid only to liquidity providers would not trigger the tax. The draft also treats certain bridge transactions as taxable exchanges when a digital asset broker is involved for consideration, and says transfers from centralized exchanges to self-custody wallets could be taxed if the exchange charges a fee. Illinois passed the Digital Asset Tax Act in June despite opposition from crypto industry groups. The tax is set to take effect on Jan. 1, 2027, and the Illinois Department of Revenue said Monday it will accept public comments on the draft through Oct. 30.
Illinois tax officials have published draft rules detailing how the state’s 0.2% digital asset transaction tax would apply to stablecoins, decentralized finance (DeFi) platforms and other forms of crypto activity.
The draft lays out implementation details for the law already enacted in the state, including which transactions and which types of digital assets would fall within its scope. Under the proposal, stablecoins would be treated as digital assets subject to the tax, while nonfungible tokens, or NFTs, would be excluded.
How the draft approaches DeFi transactions
Under the proposed rules, DeFi transactions would generally be exempt. That changes if users pay fees considered "valuable consideration," including protocol fees collected to operate or maintain a platform.
At the same time, network fees and swap fees paid solely to liquidity providers would not trigger the tax.
Bridging and transfers to self-custody wallets
The draft also identifies crypto bridging as taxable exchange activity when it is conducted through a digital asset broker for consideration.
Transfers from centralized exchanges to self-custody wallets could also be taxed if the exchange charges a fee.
Timeline for implementation and public comment
Illinois approved the Digital Asset Tax Act in June despite opposition from crypto industry groups. The tax is scheduled to take effect on Jan. 1, 2027.
The Illinois Department of Revenue said Monday that it is accepting comments on the draft through Oct. 30.
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