Illinois draft crypto tax rules detail DeFi, stablecoin treatment
Illinois’ draft rules spell out how its 0.2% digital asset transaction tax would apply to stablecoins, DeFi platforms, crypto bridges and self-custody transfers.
Illinois has released draft rules outlining how its 0.2% digital asset transaction tax will apply to various cryptocurrency activities, such as stablecoins, decentralized finance (DeFi) platforms, crypto bridges, and self-custody transfers. The Illinois Department of Revenue has accepted public comments on the draft until October 30.
The proposal treats stablecoins as digital assets subject to tax, while non-fungible tokens (NFTs) are excluded. DeFi transactions are generally exempt unless users pay fees considered as "valuable consideration," like protocol fees. However, network fees and swap fees paid exclusively to liquidity providers will not trigger the tax.
The draft also classifies crypto bridging as taxable exchange activity when conducted via a digital asset broker for consideration. Transfers from centralized exchanges to self-custody wallets may be taxed when the exchange imposes fees.
Despite opposition from crypto industry groups, Illinois passed the Digital Asset Tax Act in June, with the tax set to begin on January 1, 2027.
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