Illinois becomes first state to impose digital asset trading tax, drawing sharp criticism from industry and legal experts

Illinois just did something no other state has done: it created a tax that treats digital assets differently from every other financial instrument. Governor JB Pritzker signed SB 3019 into law in early June, and buried inside the state’s $55.9 billion budget is the Digital Asset Tax Act, or DATA. It imposes a 0.2% privilege tax on brokers who exchange, transfer, or store digital assets for customers in the state.

The tax takes effect January 1, 2027, and is projected to generate roughly $60 million in revenue.

What the tax actually does

This isn’t a capital gains tax or a sales tax applied to crypto. It’s a privilege tax on the business activity of handling digital assets, and it targets brokers specifically.

To fall under the law’s scope, a broker needs either a physical presence in Illinois or an economic nexus with the state, defined as generating over $100K in gross receipts from Illinois customers.

The 0.2% rate applies to the underlying transaction activity, not profits. No other state has carved out digital assets for this kind of standalone tax treatment. Traditional brokerages handling stocks, bonds, or commodities in Illinois don’t face an equivalent levy.

The backlash is loud and specific

Renato Mariotti, a former federal prosecutor, has been among the most vocal critics. His core complaint centers on how the tax was introduced: quietly folded into the state budget without meaningful public debate or standalone legislative consideration.

The Digital Chamber and the Illinois Blockchain Association issued a joint letter opposing the measure, calling it “substantively unsound, procedurally deficient, and economically destructive.”

Their argument boils down to three points. First, singling out one asset class for a unique tax creates an uneven playing field that penalizes innovation. Second, the legislative process bypassed normal scrutiny. Third, the tax gives crypto businesses a concrete financial reason to relocate to any of the other 49 states that don’t impose such a levy.

Illinois’ broader crypto regulatory arc

This tax didn’t emerge in a vacuum. Illinois enacted the Digital Assets and Consumer Protection Act, known as DACPA, in August 2025. That law established a regulatory framework for digital asset businesses operating in the state, with an emphasis on consumer protections.

The addition of DATA just months after DACPA shifts that narrative considerably. The $60 million in projected revenue represents a fraction of 1% of the total $55.9 billion budget.

What this means for investors and the broader market

The immediate impact on individual crypto holders in Illinois is indirect. This is a tax on brokers, not on users.

Industry groups have described the law as “procedurally deficient.” Constitutional challenges around the Commerce Clause, or equal protection arguments based on the asymmetric treatment of digital versus traditional assets, are both plausible avenues.

For now, Illinois stands alone with this approach, with the tax set to take effect January 1, 2027.