CFTC Chairman Michael Selig warned that Illinois risks weakening Chicago’s position as a global financial center after state lawmakers approved a tax on crypto asset transfers that he said could push blockchain innovation elsewhere.
In an op-ed published by the Commodity Futures Trading Commission, Selig said Illinois had long helped shape modern finance through its exchanges, trading firms and derivatives markets, but argued that the new measure marks a sharp break from that legacy.
Crypto transfer tax draws federal criticism
Selig criticized the measure, which imposes a 0.2% tax on a broad range of crypto asset transfers by Illinois residents based on the value of the asset being moved, arguing that it singles out blockchain-based transactions even when there is no realized profit or economic gain.
The CFTC chairman described the measure as effectively a “sin tax” on blockchain technology, saying it treats crypto transactions differently from economically similar transfers made through non-crypto formats.
“One could only imagine where the state’s economy would be today had it applied a similar tax to transactions conducted over the internet as the technology was gaining momentum in the early nineties,” Selig wrote.
Chicago’s trading legacy under pressure
Selig framed the tax as a threat to Illinois’ historic role in financial innovation, pointing to Chicago’s exchanges as pioneers of commodity derivatives markets that helped farmers hedge risk, businesses manage uncertainty and investors allocate capital.
That legacy, he argued, could be damaged as financial firms increasingly adopt crypto assets and blockchain infrastructure, leaving Illinois at risk of losing investment from companies that can choose where to build, hire and expand.
“States that provide clear and predictable regulatory environments will naturally attract more business and investment,” he wrote, adding that states which “punish innovation with taxes and draconian restrictions will drive innovation elsewhere.”
Selig warns Illinois risks “Chicago’s last trade”
The warning comes as U.S. policymakers debate broader federal rules for digital assets, including the CLARITY Act, which Selig said is intended to provide clearer rules for crypto markets while supporting responsible innovation and consumer protection.
Selig argued that Illinois is moving in the opposite direction at a time when regulators and lawmakers are seeking a national framework for blockchain technology. He said blockchains could transform the transfer of value in the same way the internet changed the transfer of information, with assets from commodities to currencies, stocks and bonds likely to be tokenized over time.
Selig ended his criticism with a stark warning for Illinois, saying the decision to “loot crypto wallets” rather than support pro-innovation policies could one day be remembered as “Chicago’s last trade.”
