CFTC's Selig Warns Illinois Crypto Tax May Stifle Innovation

Illinois lawmakers approved a measure that would impose a 0.2% tax on the value of transferred crypto assets, including transactions that generate no realized profit. The proposal has drawn fire from the Commodity Futures Trading Commission chairman, who argued the state risks pushing financial innovation to other jurisdictions.

CFTC Chairman Mike Selig called the measure a "sin tax" on blockchain technology in a post on X. He said the tax places the future of Chicago as a financial market center at risk.

"Illinois lawmakers have placed the future of Chicago as a financial market hub at risk by instituting a 'sin tax' on blockchain technology," Selig wrote. "The decelerationist law goes so far as to tax transfers of crypto assets that generate no economic gain."

In an op-ed published in The Washington Times, Selig noted the tax would cover a broad range of crypto transfers by Illinois residents, including those with no profit. He pointed out that comparable transfers through the traditional financial system would not face similar treatment. No comparable financial transaction tax exists elsewhere in the United States, he wrote.