CFTC Chair Mike Selig says Illinois' 0.2% crypto transaction tax could drive investors from Chicago. Coinbase's Grewal calls it 'dumb.' The law takes effect January 2027.
Illinois passed a 0.2% tax on every crypto transaction in July as part of the state's fiscal budget. The Commodity Futures Trading Commission chairman, Mike Selig, is pushing back hard.
Selig wrote in an opinion piece that the law could make Chicago lose its financial position. He said the punitive tax would drive investors and businesses out of the state. The Chicago Mercantile Exchange, the world's largest derivatives exchange and a crypto trading hub, is based in Illinois.
Selig called the move Chicago's "last trade."
Coinbase's chief legal officer, Paul Grewal, agreed. He described the tax as one of the dumbest policies around. "There is no more effective way to kill an innovation than to tax its mere use," Grewal said. "The people of IL deserve better."
The tax applies to every transaction, not just capital gains. That means even a routine transfer or a small trade incurs the charge. Critics argue it will push activity to other states or offshore venues.
Selig pointed to federal efforts as a better path. The CLARITY Act aims to set clear rules for crypto markets but has little to do with tax. It is stuck in the Senate. The U.S. House has reviewed seven tax proposals that address issues like double taxation of mining and staking rewards. None have advanced, and the calendar is tight ahead of the November midterms.
"There was no need for a punitive crypto tax law," Selig wrote. He said the federal government was already moving toward a more measured approach.
CME Group carries an AlphaScala Score of 50 out of 100, with a Mixed label. The exchange offers 24/7 crypto trading and faces direct exposure to any policy that drives volumes away from its home state.
The Illinois tax law takes effect in January 2027. The pace of federal crypto tax reform now depends on who controls Congress after the midterms. For now, the state's move stands as the most aggressive U.S. tax on digital assets – and a test of whether punitive rates kill innovation or simply push it elsewhere.
Prepared with AlphaScala research tooling and grounded in primary market data: live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.