Illinois Passed the Most Anti-Crypto Law in the US: Miles Jennings

Critics say the measure effectively singles out digital assets for taxation based on technology rather than activity.

Andreessen Horowitz crypto executive Miles Jennings criticized Illinois’ newly enacted Digital Asset Privilege Tax Act on June 17, calling it “one of the most anti-crypto laws in the US.”

The law imposes a 0.2% tax on the exchange, transfer, and custody of digital assets, with no meaningful exemptions for routine self-custody moves.

Backlash From the Crypto Industry

According to Jennings, no other US state has a transaction-based tax on crypto like the one in Illinois, and there are no comparable levies on stocks, bonds, or derivatives anywhere else in the country.

‘That means crypto is being singled out in violation of several federal laws,” he wrote.

His comments were in line with those made in a June 16 letter from the Crypto Council for Innovation (CCI) to Illinois Governor J.B Pritzker, requesting that he veto the legislation. CCI had argued that the law places unique and disproportionate burdens on citizens simply by holding digital assets, thus potentially forcing users and entrepreneurs out of the state.

The group was of the view that the measure will tax blockchain-based activity based on the technology used rather than the nature of the transaction itself. It also raised concerns about the manner in which the law had been passed, noting that affected stakeholders had not been given the chance to weigh in.

On his part, Jennings accused Pritzker of poor timing, considering that Illinois had just adopted the Digital Asset and Consumer Protection Act, something he described as a “constructive approach to blockchain technology.”

“So, rather than embracing innovation and the cost efficiencies blockchain can deliver for ordinary people in Illinois, the state is poised to punish its entrepreneurs and citizens that want to use crypto,” he argued.

Tax Treatment Is a Growing Policy Battleground

The Illinois law comes at a time when the US Congress is working toward a national framework for crypto taxation, and CCI’s letter had argued that Pritzker should have held off on his approach until federal standards were in place. It warned that the Prairie State’s decision could lead to a “patchwork” of crypto tax laws across the other 49 jurisdictions, which would only muddy the waters even more.

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That concern has some context. Earlier in the month, Coinbase vice president of tax Lawrence Zlatkin testified before the House Ways and Means Committee, pushing for simpler federal crypto tax rules, including treating federally regulated stablecoins as equivalent to cash and creating de minimis exemptions for small transactions.

The hearing covered six standalone bills aimed at updating how the US tax code treats digital assets, with Jennings’ post on X giving a direct read on what’s at stake:

“When states adopt discriminatory, asset-specific taxes that drive builders and users elsewhere, we all lose.”