With Illinois’ new tax on crypto set to become effective on Jan. 1, 2027, brokers with any Illinois exposure should prepare for registration now and review their recordkeeping, law firm Jones Day said in a commentary posted in June.
When the law becomes effective, Illinois will impose a 0.2% tax on the value of digital assets exchanged, transferred or stored by customers in the state. The tax will be borne by customers and will be collected by brokers that have either a physical presence in the state or $100,000 or more in Illinois gross receipts, according to the commentary.
Registration is required as of Jan. 1, 2027, even for those who have not met the tax collection threshold, per the commentary.
“Brokers with any Illinois exposure should prepare for registration now and review their recordkeeping because Illinois will presume all receipts are in-state unless the broker proves otherwise,” Jones Day said in the commentary. “Registration is required before a broker conducts any digital asset transaction with an Illinois customer, not after hitting the $100,000 threshold.”
The firm added that the new Illinois law may face constitutional challenges.
“Brokers operating across multiple states or internationally should evaluate how this new tax layer interacts with existing federal reporting obligations and other jurisdictions’ digital asset frameworks,” Jones Day said.
Illinois Gov. JB Pritzker signed the law imposing the tax on customers’ use of digital asset services in June, PYMNTS reported at the time.
The Crypto Council for Innovation, which asked Pritzker to issue a line-item veto for the tax, said at the time that no other state in the country had adopted a transaction-based tax like the one in Illinois and that Pritzker had just signed “the most punitive digital asset tax in the country into law.”
Later in June, Crypto Council for Innovation CEO Ji Hun Kim told FOX 32 Chicago that the new crypto tax will drive digital asset innovation out of Illinois.
In an interview shared by CCI in a June 24 post on X, Kim said: “This tax is punitive. You are being taxed simply for holding, using digital assets.”
Commodity Futures Trading Commission Chairman Michael S. Selig said in a Thursday (July 2) post on X that by instituting this tax on blockchain technology, Illinois lawmakers have placed the future of Chicago as a financial hub at risk.
“As blockchain technology continues to transform our markets, the choice to plunder crypto wallets rather than promote economic growth may go down in history as Chicago’s last trade,” Selig said in the post.
