Illinois Gov. J.B. Pritzker is facing crypto community backlash after signing a controversial budget bill that includes a 0.2% tax on covered crypto exchange, transfer and even storage activity.
The Digital Asset Tax Act, set to take effect on Jan. 1, 2027, has been called draconian by critics as they say its broad wording could tax users even when they move crypto between their own wallets without selling.
- The law taxes "digital asset business activity" received by Illinois customers.
- The controversial wording is broad because it covers the "exchange, transfer, or storage" of crypto when carried out through a digital asset broker or service provider.
The tax rate is 0.2% of the value of the crypto tied to that activity. Critics say that means buying, selling, moving or just holding crypto through an exchange, custodian or wallet service could create a tax bill based on the value of the asset.
- The Crypto Council for Innovation, a crypto policy group, described it in an X post as "the most punitive digital asset tax in the country" and warned it could push builders out of Illinois.
- Miles Jennings, head of policy and general counsel at a16z Crypto, called it "one of the most anti-crypto laws in the U.S." and said the bill taxes the "exchange, transfer, or storage of digital assets." He argued that Illinois is singling out crypto because the asset is recorded on a blockchain.
- Hayden Adams, founder of Uniswap, was more direct, comparing the idea to "taxing changing your bank password" and calling it "possibly the dumbest fucking thing I've ever seen."
- Jake Brukhman, founder of crypto investment firm CoinFund, pointed out that under the new taxation, moving $14 billion worth of crypto from one wallet setup to another would equal $280 million in tax at a 0.2% rate.
- Solana co-founder Anatoly Yakovenko called the move "completely inane and moronic," adding that politicians "want us all to have Gell-Mann Amnesia by midterms."
The law's real-world application still needs guidance. Joe Carlasare, a crypto lawyer, said it remains unclear whether moving BTC from self-custody to Coinbase and immediately selling would count as one taxable event or two because the statute doesn't include worked examples.
The statutory language appears to be broad enough that market participants are already asking how Illinois will treat self-custody wallet transfers, exchange deposits, custodial storage and simple portfolio moves.
The Illinois Department of Revenue hasn't yet issued formal examples explaining how the tax will apply in those cases.
Updated 11:32 am UTC: This story was updated to add comments from Solana co-founder Anatoly Yakovenko