Illinois tax officials have published draft rules detailing how the state's already-enacted 0.2% digital asset transaction tax would apply to stablecoins, decentralized finance (DeFi) platforms, and other crypto activity.

The draft rules, issued by the Illinois Department of Revenue, provide implementation details for the law, specifying which transactions and digital assets would fall within its scope when the tax takes effect on Jan. 1, 2027. Because the levy attaches to each transaction rather than to gains realized at disposal, those scope definitions will determine how much day-to-day crypto activity is captured once the tax is in force.

Stablecoins in scope, NFTs excluded

Under the proposal, stablecoins — cryptocurrencies designed to maintain a stable value against a reference asset such as the U.S. dollar — would be treated as digital assets subject to the tax. Their inclusion means transactions in dollar-pegged tokens, commonly used as a dollar stand-in for trading and payments, would fall under the levy. Nonfungible tokens (NFTs), which represent unique on-chain items rather than interchangeable units, would be excluded.

DeFi carve-outs hinge on “valuable consideration”

DeFi transactions would generally be exempt unless users pay fees considered “valuable consideration,” such as protocol fees collected for operating or maintaining a platform. Network fees and swap fees paid solely to liquidity providers would not trigger the tax. That fee-based dividing line is the draft's pivotal detail for DeFi users, since it determines whether routine protocol usage remains exempt or becomes a taxable event.

The rules also identify crypto bridging — the transfer of tokens between blockchains — as taxable exchange activity when conducted through a digital asset broker for consideration. Transfers from centralized exchanges to self-custody wallets, in which users hold assets directly rather than through an intermediary, could also be taxed when the exchange charges a fee — meaning that, under the draft, moving one's own assets can carry a tax cost when a fee is involved.

Legislative background

Illinois approved the Digital Asset Tax Act in June, despite opposition from crypto industry groups. State legislatures across the United States have taken differing approaches to digital asset taxation; the per-transaction levy stands apart from the federal framework, under which the Internal Revenue Service treats cryptocurrency as property for tax purposes. The structural difference means Illinois transactions would face the state levy at the time of each transaction, separate from the federal treatment that applies at disposal.

Public comment period

The Illinois Department of Revenue said Monday that it is accepting comments on the draft through Oct. 30. Under standard state rulemaking procedures, agencies typically review stakeholder submissions before finalizing draft rules. Whether the draft's scope decisions — stablecoins in, NFTs out, and the DeFi fee distinctions — carry unchanged into the final text is the open question as the Oct. 30 deadline approaches.