Michael Saylor blasted Illinois’ new crypto tax as a “Big Mistake” after Governor J.B. Pritzker signed the Digital Asset Privilege Tax Act into law — a move critics say could reshape the state’s crypto landscape.
What the law does
- Starts Jan. 1, 2027.
- Imposes a 0.2% levy on “covered digital asset transactions,” explicitly including transfers between wallets.
- Also adds a 1.75% tax on sports bets placed through prediction-market platforms such as Polymarket.
- State officials estimate the rule could raise up to $60 million a year.
Industry pushback
The measure drew immediate and vocal opposition. Strategy co-founder Michael Saylor called the governor’s decision a “Big Mistake” in a June 17 post. The Digital Chamber and the Illinois Blockchain Association urged officials to reject the tax in a joint letter, saying it could damage the state’s digital-asset sector. The Crypto Council for Innovation asked the governor to veto the law, arguing it taxes activity itself rather than gains or income and lacks routine-transaction exceptions or a de minimis threshold to protect small transfers.
Other critics point out procedural concerns: the tax was slipped into a 1,624-page budget bill instead of being debated as standalone legislation. Miles Jennings, head of policy and general counsel at a16z Crypto, noted there’s “no comparable state financial transaction tax” on stocks, bonds, or derivatives in the U.S.
New compliance burdens
The law creates fresh obligations for digital-asset brokers. Tax advisory firm BDO says the rules can apply to out-of-state brokers if they generate at least $100,000 in annual receipts from Illinois customers. State sourcing rules are broad and may rely on customer location data, account records, mailing addresses, IP addresses, and other indicators that Illinois is the primary place of use.
Key broker obligations:
- Collect the tax as a separate line item from users.
- Maintain records and file monthly reports covering the previous month’s activity.
- Register before the Jan. 1, 2027 start date; registrations renew automatically unless canceled or revoked.
Open questions and friction points
Several technical and legal ambiguities remain. Litigator Joe Carlasare highlighted uncertainty over routine scenarios — for example, whether moving Bitcoin from self-custody to an exchange like Coinbase and immediately selling it counts as one taxable event or two under the statute. Such interpretive gaps will matter for users and firms trying to calculate and collect the levy.
Broader context
The Illinois move comes as federal lawmakers continue debating crypto tax policy: the House Ways and Means Committee recently released seven discussion drafts covering different aspects of digital-asset taxation. Illinois is also already entangled with the industry on a separate front — the state faces a CFTC lawsuit after regulators sought to limit prediction-market platforms like Polymarket and Kalshi.
What’s next
With the law signed, attention now shifts from legislative wrangling to implementation and potential legal challenges. Brokers and users have until 2027 to adapt systems and compliance workflows, but unresolved questions and strong industry resistance suggest litigation, regulatory guidance, and further political pushback are likely to follow.
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