McCloy on crypto tax: ‘This is a dangerous power grab and a classic slippery slope’
Kristina McCloy, founder of Concerned Parents of Illinois, says Illinois’ new Digital Asset Privilege Tax Act represents a major expansion of government control over private wealth and financial activity.
The digital asset tax is part of Illinois’ broader $55.9 billion budget Gov. J.B. Pritzker signed June 16, the largest in state history, which is expected to raise between $815 million and $1.4 billion through new taxes, fees, and transfers.
“Governor Pritzker just signed a 0.2% tax on crypto transactions, the first of its kind in America,” McCloy told the DuPage Policy Journal. “They’re calling it a ‘privilege tax’ on digital asset activity, but this is a dangerous power grab and a classic slippery slope.”
Illinois has become the first state in the nation to tax cryptocurrency transactions under the measure, placing it at the center of a growing national debate over how digital assets should be regulated and taxed.
The 0.2% levy applies to digital asset business activity received by customers in Illinois and must be collected by digital asset brokers. It is one of seven new taxes and revenue measures embedded in the 2027 budget, which critics say will raise costs for residents and businesses while weakening the state’s competitiveness.
Taking effect Jan. 1, 2027, the law requires brokers to collect the tax on qualifying digital asset transactions involving Illinois customers.
McCloy said the policy sets a broader precedent for state control over personal assets.
“Make no mistake, it sets a terrifying precedent for government to seize and control our capital,” she said. “Today it’s crypto transfers, trades, and custody. Tomorrow? Your stocks, your savings, your 401(k), or any asset they decide to target.”
She also tied the measure to broader fiscal concerns, arguing Illinois residents are already under strain from taxes and economic pressures.
“Hard-working Illinoisans are already fleeing high taxes and crime. Now Pritzker has to find new ways to squeeze hardworking taxpayers to pay for it all— funneling money to his estimated 620,000 illegal aliens while passing the biggest budget in state history: a bloated $55.9 billion loaded with handout pandering and political payoffs,” McCloy said.
“It’s not just our would-be crypto hub, this will drive away the next generation of entrepreneurs and tech jobs from Chicago and Illinois,” she said.
Opposition has also come from industry groups including the Illinois Blockchain Association and The Digital Chamber, which jointly urged lawmakers to reject the measure.
“The tax is substantively unsound, procedurally deficient, and economically destructive,” the letter reads.
The groups argued the law was advanced without public hearings or stakeholder input arguing the process amounted to “an unfortunate and severe example of midnight policymaking.”
They also warned the tax could apply to routine crypto activity such as transfers, exchanges, and custody services, even without realized gains, and said it would place Illinois at a disadvantage compared with other states.
“No other state currently imposes a transaction-level privilege tax of this nature on digital asset activity,” the letter reads.
They added that the policy “will generate an exodus of innovation and investment from the State.”
Additional opposition came from the Crypto Council for Innovation, which warned the measure could deter industry growth.
The group said it would have “a profound chilling effect on digital asset activity in Illinois.”
Tax and cryptocurrency attorney Andrew Gordon of the Skokie-based Gordon Law Group also criticized the measure, saying it could apply even to routine transfers that generate no profit.
“So even if you're just transferring crypto from one wallet or exchange to another, you're still going to be hit with that tax,” Gordon told North Cook News. “It's almost like a disguised wealth tax because you're not paying tax on what your increase is, you're just paying tax because you hold it,” he said.
Gordon also pointed to precedent concerns.
“There's been talks historically about transaction taxes on stocks,” Gordon said. “Governor Pritzker even a couple of years ago said there's no way that you'd ever have a transaction tax on stocks. And now we've got one on crypto. And once we start doing this with one industry, where does it go to in the future?”
He said the law breaks from traditional income-based tax systems and could increase costs for users as exchanges pass along fees and expand compliance monitoring, adding that firms may look to relocate to “a more fair, more attractive state.”
“I'm hearing from a lot of people, individual investors, that it's even harder to live in the state because you're gonna pay a tax just for essentially holding crypto,” he said.
Gordon also raised the possibility of legal challenges due to the law’s industry-specific design and criticized the legislative process as rushed and lacking public input.
“There was no foresight into this. There isn't the opportunity for the crypto industry or the public at large to provide comments. There wasn't any debate,” he said.
Since taking office in 2019, and prior to the 2027 budget’s tax and fee increases, Pritzker has approved 57 tax and fee hikes totaling an estimated $77 billion, with the median household paying roughly $1,400 more per year than in 2018, Illinois Policy reported.