Illinois' governor approved a tax on cryptocurrency transactions this week, making the state the first in the U.S. to enact such a levy. The move has drawn an immediate rebuke from a16z general counsel Miles Jennings, who pointed out that no comparable state tax exists on stocks, bonds, or derivatives anywhere in the country.
A first-of-its-kind tax
The law targets cryptocurrency transactions processed in Illinois, though specific details — including the tax rate and exactly which trades get hit — haven't been released yet. That lack of clarity adds to the uncertainty for crypto businesses operating in the state. The tax appears to be entirely new territory: no other state has a financial transaction tax that singles out digital assets.
Jennings calls foul
Miles Jennings, general counsel at venture firm a16z, wasn't shy about the disparity. "There is no comparable state financial transaction tax on stocks, bonds, or derivatives anywhere in the country," Jennings said in a statement. His point is straightforward: Illinois is treating crypto differently from every other asset class. For an industry already fighting for regulatory parity, the message stings.
The tax could push some crypto activity out of Illinois. Companies might relocate or route trades through other states to avoid the new levy. That's a real risk for a state that's been trying to position itself as a fintech hub. And the timing isn't great — federal crypto rules are still being debated, and a patchwork of state taxes only complicates compliance.
Jennings' comment highlights a broader question: if states can tax crypto transactions this way, why not stocks? For now, Illinois has answered that question with a law that applies only to crypto. Other states are watching closely.
