Illinois Wants to Tax You for Just Holding Crypto. We're Pushing Back.

TL;DR: Illinois passed a new law that taxes people 0.2% of the value of their crypto every time it's exchanged, transferred, or even just held in storage, whether or not they ever sell, buy, or make a dime. It was slipped into a massive bill and passed within 24 hours with almost no public debate. It's set to take effect January 1, 2027. Anchorage Digital has joined other companies in supporting a lawsuit to strike it down, and we've submitted our own statement to the court explaining the real-world harm it would cause. 

What the law actually does

Imagine you keep your savings at a bank. Now imagine the state charges you a tax just for the bank holding your money, even though you never withdrew it, spent it, or transferred it. That's basically what Illinois's new "Digital Asset Tax Act" does, except it only applies to crypto.

Under the law, Illinois residents get taxed 0.2% of the value of their digital assets every time those assets are:

• Traded (like swapping dollars for Bitcoin)
• Moved (like sending crypto to another wallet, even one you own)
• Simply stored with a company like Anchorage Digital

No sale needs to happen. No profit needs to be made. You could lose money and still owe the tax.

Illinois doesn't tax any other kind of asset this way. If you move money from your checking account to your savings account you pay nothing. Do the equivalent with crypto, and the state wants a cut.

How it became law

This wasn't the product of careful debate. The tax was quietly added to a 1,624-page bill on the very last day of Illinois's legislative session. Lawmakers gave the public about an hour's notice before voting, and both the House and Senate passed the whole thing within 24 hours.

Why this matters to Anchorage Digital, and to you

Anchorage Digital keeps crypto safe for our customers. This law comes with real teeth. Companies that don't comply can face felony charges, even for good-faith mistakes, because the law is so unclear about basic questions like when exactly the tax applies.Complying isn't simple either. Industry estimates put the cost of building the necessary infrastructure at several hundred thousand dollars to over $1 million. Those costs land directly on Anchorage Digital and our clients, but we're not alone: many crypto firms will face the same uncertainty and the same bill.

What we're doing about it

In August, two industry groups, the Blockchain Association and the Crypto Council for Innovation, jointly sued the state of Illinois, arguing the tax is unconstitutional for several reasons, including that it unfairly singles out digital assets, is too vague to follow, and was passed in a way that violates Illinois's own lawmaking rules.

Anchorage Digital has submitted a formal statement supporting that lawsuit, laying out exactly how this tax would hurt our business and our Illinois customers.

Read our declaration letter opposing the Act