On July 22, Strategy co-founder Michael Saylor posted on X, blasting Illinois Governor J.B. Pritzker's signing of the Digital Asset Privilege Tax Act as a 'Big Mistake'. The law, effective Jan. 1, 2027, imposes a 0.2% tax on covered digital asset transactions, including wallet-to-wallet transfers. State officials estimate it could generate up to $60 million annually.
Saylor calls 0.2% crypto transaction tax a 'Big Mistake'
Saylor's criticism came shortly after the bill became law as part of Illinois' budget package. The legislation also includes a 1.75% tax on sports bets placed through prediction market platforms like Polymarket. Saylor's remarks quickly resonated within the crypto community.
Industry groups warn: tax could drive firms away
The Digital Chamber and the Illinois Blockchain Association sent a joint letter urging state officials to reject the proposal. They noted that no other U.S. state currently imposes a comparable tax on crypto transactions. The legislative process drew criticism as the proposal was inserted into a 1,624-page budget bill rather than advancing as standalone legislation. The Crypto Council for Innovation (CCI) requested a veto, arguing the tax departs from traditional tax systems by targeting digital asset activity itself, not gains, profits, or income. CCI also stated the law lacks exceptions for routine transactions or a de minimis threshold, potentially burdening Illinois residents and discouraging companies from building in the state. Miles Jennings, head of policy at a16z Crypto, noted there is 'no comparable state financial transaction tax' on stocks, bonds, or derivatives anywhere in the U.S.
New registration and reporting requirements for brokers
Beyond the tax, the legislation creates new compliance obligations for digital asset brokers. According to tax advisory firm BDO, the rules apply not only to Illinois-based businesses but also to out-of-state brokers generating at least $100,000 in annual receipts from Illinois customers. State sourcing rules are broad, relying on customer location data, account records, mailing addresses, IP addresses, or other indicators. Brokers must collect the tax as a separate line item, maintain records, and file monthly reports. Registration must be completed before Jan. 1, 2027, with automatic renewal unless canceled. Litigator Joe Carlasare pointed to unresolved compliance questions: moving Bitcoin from self-custody to Coinbase and immediately selling it could create one taxable event or two.
The new tax has also intensified existing tensions between Illinois and parts of the crypto industry. The state is already facing a CFTC lawsuit over prediction markets after attempting to restrict platforms like Polymarket and Kalshi. With the law signed, attention shifts from legislative debate to how brokers and users will prepare for the new rules before 2027.