Illinois drafts how its 0.2% crypto transaction tax hits DeFi and stablecoins
Serguey Asael Shinder1 min readThe Illinois Department of Revenue has published draft rules for the state's Digital Asset Tax Act, detailing how its 0.2% transaction tax would apply to stablecoins, decentralized finance, bridges and self-custody transfers, Cointelegraph reports. The law was approved in June over opposition from industry groups and takes effect on 1 January 2027.
Under the draft, stablecoins are treated as digital assets and taxed, while non-fungible tokens are excluded. DeFi transactions are generally exempt unless users pay fees the rules consider "valuable consideration", such as protocol fees collected for operating or maintaining a platform. Network fees and swap fees paid only to liquidity providers would not trigger the tax.
Two provisions reach further. Bridging assets between chains counts as taxable exchange activity when done through a digital asset broker for consideration. And transfers from a centralized exchange to a user's own wallet could be taxed when the exchange charges a fee for them.
The department is taking comments on the draft until 30 October.
Why it matters
A state-level tax on transactions rather than gains is unusual, and the draft shows how much depends on definitions: whether a fee goes to a protocol or to liquidity providers decides whether a DeFi trade is taxed. The self-custody provision will draw the most attention, since it taxes a user moving their own assets whenever the exchange charges for the withdrawal.