Key Takeaways
- • Andreessen Horowitz (a16z), Uniswap Labs, and the DeFi Education Fund filed joint formal comments on October 30, 2026, opposing the Illinois Department of Revenue's draft crypto tax rules.
- • The filing asks regulators to remove decentralized exchanges (DEXs) and their interfaces from the legal definition of digital asset brokers, arguing they lack the capability to act as tax-collecting intermediaries.
- • The petitioners object to a requirement to retain users' private keys, proposing public wallet addresses and on-chain transaction identifiers instead, and urge that transfers between wallets owned by the same user and cross-chain bridge transactions not be taxed.
- • Illinois' 0.2% levy applies to the gross value of transactions, so a $10,000 transaction would generate a $20 tax regardless of platform margin, according to sector estimates.
- • The compliance schedule remains stayed under an injunction until July 1, 2027, while separate lawsuits by the Chamber of Digital Commerce and the Illinois Blockchain Association continue.
Summary
Andreessen Horowitz (a16z), Uniswap Labs, and the DeFi Education Fund submitted a joint response on Friday, October 30, 2026, opposing proposed cryptocurrency tax regulations in Illinois. The filing challenges guidelines stemming from the Digital Asset Tax Act and was publicized by the DeFi Education Fund, which said it sought to keep DEXs and interfaces out of the broker definition, protect self-custody, and avoid taxing transfers of a user's own assets.
The submission argues that the current framework imposes unfeasible tax obligations on decentralized infrastructure. According to the document, smart contract-based protocols lack the technical capability to serve as tax-collecting agents or traditional financial intermediaries, and a decentralized exchange operates without banking intermediaries while users retain direct control of their funds. The petitioners contend the draft seeks to classify user interfaces and protocols as digital asset brokers solely for charging protocol fees. They asked the Department of Revenue to confirm that users trading on a DEX for their own account fall under the dealer-trader principal exclusion, and argued that protocol fees directed to burn mechanisms or executed automatically via code do not constitute direct commercial compensation for developers.
On cryptographic key storage, the organizations argue that mandating retention of private keys compromises ecosystem integrity and increases the risk of security breaches and theft. They requested that any such requirement be replaced with the use of public wallet addresses and on-chain transaction identifiers. The filing also rejects taxation of transfers between accounts controlled by the same person, likening withdrawals from custodial platforms to self-custody wallets to moving assets between personal storage spaces. On cross-chain bridging, the participants warned that taxing these transfers would result in double taxation of the same asset while legal ownership is unchanged.
The filing addresses Illinois' 0.2% levy on the gross value of digital asset transactions executed through registered intermediaries. Unlike federal taxes on realized capital gains, the state rate applies to gross transferred volume; sector estimates cite a $20 tax on a representative $10,000 transaction regardless of platform margin or fee. The October 30 comments follow a separate administrative track from ongoing lawsuits brought by the Chamber of Digital Commerce and the Illinois Blockchain Association, which seek judicial invalidation of the tax on state and federal constitutional grounds. The compliance schedule remains stayed under an injunction until July 1, 2027, the expiration date of an extension agreed between the State of Illinois and industry plaintiffs.
The submission argues that the current framework imposes unfeasible tax obligations on decentralized infrastructure. According to the document, smart contract-based protocols lack the technical capability to serve as tax-collecting agents or traditional financial intermediaries, and a decentralized exchange operates without banking intermediaries while users retain direct control of their funds. The petitioners contend the draft seeks to classify user interfaces and protocols as digital asset brokers solely for charging protocol fees. They asked the Department of Revenue to confirm that users trading on a DEX for their own account fall under the dealer-trader principal exclusion, and argued that protocol fees directed to burn mechanisms or executed automatically via code do not constitute direct commercial compensation for developers.
On cryptographic key storage, the organizations argue that mandating retention of private keys compromises ecosystem integrity and increases the risk of security breaches and theft. They requested that any such requirement be replaced with the use of public wallet addresses and on-chain transaction identifiers. The filing also rejects taxation of transfers between accounts controlled by the same person, likening withdrawals from custodial platforms to self-custody wallets to moving assets between personal storage spaces. On cross-chain bridging, the participants warned that taxing these transfers would result in double taxation of the same asset while legal ownership is unchanged.
The filing addresses Illinois' 0.2% levy on the gross value of digital asset transactions executed through registered intermediaries. Unlike federal taxes on realized capital gains, the state rate applies to gross transferred volume; sector estimates cite a $20 tax on a representative $10,000 transaction regardless of platform margin or fee. The October 30 comments follow a separate administrative track from ongoing lawsuits brought by the Chamber of Digital Commerce and the Illinois Blockchain Association, which seek judicial invalidation of the tax on state and federal constitutional grounds. The compliance schedule remains stayed under an injunction until July 1, 2027, the expiration date of an extension agreed between the State of Illinois and industry plaintiffs.
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