Illinois 0.2% blanket tax for every crypto transaction, passed in July as part of the state’s fiscal budget, continues to elicit backlash.
Mike Selig, chairman of the Commodity Futures Trading Commission (CFTC), slammed the state lawmakers. He warned that the law could make Chicago lose its financial position.
In a recent opinion piece, Selig argued there was no need for the punitive crypto tax law. He said the federal government was already advancing the more measured CLARITY Act.
Yet Illinois lawmakers decided they know better than the federal lawmakers who have been working on delivering clarity to crypto asset markets for years.
The Chicago Mercantile Exchange (CME), the world’s largest derivatives exchange, is based in Illinois. It also offers 24/7 crypto trading.
Selig added that such a move would make investors flee the state, making it Chicago’s ‘last trade’.
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.
Will the federal crypto tax law delay?
Coinbase’s Legal Chief Paul Grewal also echoed Selig’s stance, calling the 0.2% tax law one of the dumb policies.
Just when it seemed that we have enough dumb tax policies, here’s one more. There is no more effective way to kill an innovation that to tax its mere use. The people of IL deserve better.
The Illinois tax law will go live in January 2027.
Well, while the CLARITY Act seeks to be pro-innovation and onshore crypto and protect related jobs, it has little to do with tax. As such, when passed as it is currently, there will be no crypto tax clarity for the US users.
In fact, the bill is stuck in the Senate and won’t offer any crypto tax relief even if passed today.
However, the U.S Congress (House) has reviewed seven tax proposals for crypto that address key issues, including the double taxation of mining and staking rewards. Unfortunately, this too may take a while to be enacted, given the tight calendar ahead of the November midterms.
Overall, there is a possibility that the tax proposals may see renewed momentum after the elections. And the pace of crypto tax law progress will also depend on who controls Congress after the November midterms.
Final Summary
- CFTC Chair Selig slammed Illinois lawmakers and warned that the 0.2% tax on crypto could make Chicago risk losing its financial markets position. The
- CLARITY Act won’t offer any tax relief to US crypto users, as broader federal proposals could take a little longer to be formalized.