Securities Regulation Daily Wrap Up, BLOCKCHAIN—CFTC’s Selig slams new Illinois crypto tax, (Jul 7, 2026)
Selig asked where Illinois’ economy would be today if it had imposed a similar tax on internet transactions as the technology was gaining momentum in the nineties.
CFTC Chairman Michael Selig published an op-ed strongly criticizing a newly enacted Illinois tax on digital asset transactions, saying it risks the legacy of Illinois as an engine of financial innovation. Selig said the tax will put Illinois residents at a disadvantage in an increasingly tokenized future.
In the nation’s first state digital asset transaction tax, Illinois will impose a 0.2% tax on the value of a digital asset exchanged, transferred, or stored by customers in Illinois, beginning January 1, 2027.
The op-ed, “Chicago’s Last Trade,” was published in the Washington Times on July 1.
Digital asset tax. The new tax was enacted by the Illinois Digital Asset Tax Act (DATA) as part of the Revenue Omnibus Bill (S.B. 3019; Public Act 104-0468). The legislation was signed by Governor J.B. Pritzker on June 16, 2026.
The tax is imposed on “the privilege of receiving any digital asset business activity by a customer” in Illinois at the rate of 0.2% of the value of the digital asset to which the digital asset business activity relates.
Digital asset brokers making or effectuating the sale of the digital asset business activity have a duty to collect the tax on each sale.
The act defines relevant terms including “customer,” “digital asset,” and “digital asset business activity.”
A bill to repeal DATA has been introduced (H.B. 5798).
Selig criticism. Selig said the new tax is “effectively a ‘sin tax’ on blockchain technology” and that Illinois lawmakers “slammed the brakes on technological progress.”
He believes the tax will put Illinois constituents at a “significant economic disadvantage” because in the future, “anything and everything” is likely to be tokenized, i.e., represented in crypto asset format. States that punish innovation with taxes and draconian restrictions will drive innovation elsewhere, he said.
He noted that the tax is imposed even when the transaction generates no realized profit or economic gain. In contrast, transferring the same value in a non-crypto asset format would not result in a tax.
“In other words, the law treats economically identical transactions differently based on the technology used to affect each transaction,” he wrote.
He blasted Illinois lawmakers for thinking they “know better” than Congress, which is actively considering the CLARITY Act, designed to establish a clear framework for crypto assets and blockchain technology.
“As blockchain technology continues to transform our financial markets, 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,” he concluded.
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