Illinois draft crypto tax rules detail DeFi, stablecoin treatment

Illinois’ draft rules spell out how its 0.2% digital asset transaction tax would apply to stablecoins, DeFi platforms, crypto bridges and self-custody transfers.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 new draft rules provide implementation details for the law, including which transactions and digital assets would fall within its scope. Under the proposal, stablecoins would be treated as digital assets subject to tax, while nonfungible tokens would be excluded. 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.The rules also identify crypto bridging as taxable exchange activity when conducted through a digital asset broker for consideration. Transfers from centralized exchanges to self-custody wallets could also be taxed when the exchange charges a fee.Illinois approved the Digital Asset Tax ...