CFTC Chair Michael Selig delivered sharp criticism of Illinois' new 0.2% crypto tax in a July 1 statement, calling it a move that could make Chicago lose its financial position. According to reports from crypto.news, Selig argued that Illinois lawmakers "decided they know better" than federal lawmakers working on crypto market rules. The tax forms part of Illinois' fiscal 2027 budget and is set to take effect on January 1, 2027.
Selig warned that the tax could make investors flee the state, potentially marking 'Chicago's last trade' as blockchain technology transforms financial markets. As reported by AMBCrypto, Selig stated that "the choice to loot crypto wallets rather than grow the state economy with pro-innovation policies may go down in history as Chicago's last trade." The concern is particularly significant given that Chicago Mercantile Exchange (CME), the world's largest derivatives exchange, is based in Illinois and offers 24/7 crypto trading services.
The Illinois Digital Asset Tax Act requires brokers to register with the Illinois Department of Revenue before covered activity begins. As reported by crypto.news, brokers must collect the tax as a separate line item and file monthly reports on covered digital asset activity. The law applies to certain digital asset activity carried out by brokers, including exchange, transfer, custody, and wallet services. The rule can also reach firms outside Illinois if they serve users in the state, raising questions about how exchanges, wallet firms, and custody providers will track and apply the tax in practice.
The tax has drawn criticism from crypto firms, policy groups, and market figures, as reported by crypto.news. Michael Saylor, co-founder of Strategy, called the Illinois tax a "Big Mistake" after Governor JB Pritzker signed the budget. Industry groups have warned that the law could raise costs for users and push crypto firms away from the state. Coinbase's Legal Chief Paul Grewal also echoed Selig's stance, calling the 0.2% tax law "one of the dumb policies" and stating there is "no more effective way to kill an innovation that to tax its mere use."
The Illinois dispute comes while Congress reviews broader crypto tax rules, with lawmakers having split the Digital Asset PARITY Act into seven tax discussion drafts covering stablecoin payments, mining, staking, lending, wash-sale rules, charitable donations, and disclosure duties. According to crypto.news, Federal agencies including the SEC and CFTC have opened a joint rules review covering derivatives, margining, and market structure questions. However, as reported by AMBCrypto, the CLARITY Act, which seeks to be pro-innovation and onshore crypto while protecting related jobs, has little to do with tax relief and is currently stuck in the Senate, meaning there will be no crypto tax clarity for US users even if passed.
