CFTC Chair warns Illinois crypto tax threatens Chicago

The chairman of the U.S. Commodity Futures Trading Commission has issued a sharp warning that a new Illinois tax on digital asset transactions threatens Chicago's future as a financial hub. Chairman Michael Selig criticized the state's Digital Asset Tax Act, which imposes a 0.2% levy on the value of cryptocurrency transfers and is scheduled to take effect on January 1, 2027.

The law, signed by Governor J.B. Pritzker as part of the state's fiscal 2027 budget, applies to exchanges, transfers, and storage of digital assets for Illinois residents, even when no profit is realized. It requires brokers to register with the state, collect the tax, and file monthly reports. Selig argued the measure treats economically identical transactions differently based solely on the use of blockchain technology, calling it a "sin tax" that penalizes innovation. He stated that Illinois lawmakers "slammed the brakes on technological progress" and decided they "know better than the federal lawmakers" who have been working on national crypto market rules.

Industry groups and companies have joined the criticism, contending the tax's design could raise costs, complicate compliance, and push businesses...