On October 30, 2026, Andreessen Horowitz, Uniswap Labs, and the DeFi Education Fund urged Illinois regulators to revise proposed rules under the state's Digital Asset Tax Act. The groups warn that classifying autonomous decentralized exchanges as tax-collecting brokers creates an effective ban on DeFi and that mandatory private key recordkeeping poses severe security risks. Illinois officials have delayed the 0.2% tax implementation to July 2027 amid ongoing litigation from the Blockchain Association and Crypto Council for Innovation.
Industry response to proposed broker rules
- ▪Andreessen Horowitz policy chief Miles Jennings stated on October 30, 2026 that classifying autonomous decentralized exchanges as brokers exceeds the authority of Illinois law and conflicts with federal classifications.
- ▪Decentralized crypto exchanges operate via autonomous software and cannot identify customer locations, control assets, collect taxes, or file individual transaction returns.
- ▪The Illinois Department of Revenue's proposed crypto tax rules classify decentralized cryptocurrency exchanges as digital asset brokers required to collect taxes and file transaction returns.
- ▪Andreessen Horowitz, Uniswap Labs, and the DeFi Education Fund requested that Illinois regulators explicitly exclude decentralized protocols, interfaces, and automated fee collectors from the definition of digital asset brokers.
- ▪Andreessen Horowitz, Uniswap Labs, and the DeFi Education Fund urged the Illinois Department of Revenue to modify proposed regulations implementing the state's Digital Asset Tax Act
Concerns over private key recordkeeping
- ▪Illinois' proposed crypto regulations would require digital asset brokers to maintain records containing customer cryptocurrency private keys.
- ▪Andreessen Horowitz, Uniswap Labs, and the DeFi Education Fund warned that storing private key records exposes customer funds to theft and urged Illinois to require public keys instead.
Objections to taxing personal wallet withdrawals
- ▪Miles Jennings compared taxing personal wallet withdrawals under Illinois' proposed rules to taxing individuals for moving funds between their own bank accounts.
- ▪Andreessen Horowitz, Uniswap Labs, and the DeFi Education Fund objected to proposed Illinois tax rules that would apply taxes to asset withdrawals from centralized exchanges into personal wallets.
Opposition to taxing cross-chain bridging
- ▪Industry groups requested that the Illinois Department of Revenue explicitly exclude blockchain bridging transfers from the state's 0.2% digital asset levy.
- ▪Illinois' proposed crypto rules would apply the state's 0.2% digital asset transaction tax to cross-blockchain transfer activities known as bridging.
Background and legal challenges to Illinois law
- ▪The Blockchain Association and Crypto Council for Innovation filed lawsuits challenging the Illinois Digital Asset Tax Act over alleged discrimination against digital asset activity and constitutional violations.
- ▪Illinois state officials agreed to postpone the implementation of the Digital Asset Tax Act from January 1 to July 1, 2027 pending ongoing litigation.
- ▪Enacted in June 2026, the Illinois Digital Asset Tax Act imposes a 0.2% levy on the total value of covered digital asset transactions rather than on capital gains profits.
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