Just as Congress is moving toward finally providing greater regulatory certainty for cryptocurrencies with legislative progress on the CLARITY Act, the state of Illinois is moving in the opposite direction.

Earlier this summer, Gov. JB Pritzker (D-IL) signed a $55.9 billion budget that includes the nation’s first state tax aimed specifically at digital asset transactions and services. Beginning Jan. 1, 2027, the Digital Asset Tax Act (DATA) will impose a 0.2% levy on cryptocurrency exchanges, transfers, custody services, and digital wallets — a first-of-its-kind tax that singles out one financial technology for treatment no other major asset class receives.

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The law applies primarily to cryptocurrency service providers such as exchanges, custodians, and wallet platforms, but the costs are unlikely to stop there. As with most transaction taxes, businesses will have every incentive to pass........

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