Illinois just gave the rest of the country a preview of the next phase of financial surveillance.
The state’s new Digital Asset Tax Act imposes a 0.2% tax on digital asset exchange, transfer, custody, and storage. The key word is transfer. That means the taxable event is no longer selling bitcoin for a gain. It can be moving bitcoin. It can be custody. It can be storage. The state is trying to tax the use of the rails themselves.
The absurdity is obvious if you translate it into the physical world. Imagine buying gold, putting it in a safe, then deciding later that you would rather keep it in your basement. Illinois’ theory is that the act of moving your own property from one place you control to another place you control should generate tax revenue for the state.
That is theft. The state will probably collect this through brokers and custodians, because that is where the choke points are. Coinbase can be forced to report. A custodian can be forced to remit. A self-custody user moving bitcoin between his own wallets is a much harder target. That is the whole point. Bitcoin turns “please comply with our insane reporting scheme” into a technical and economic problem for the government. If you are a Christian, or otherwise consider yourself bound by any logical ethical framework, you have a moral duty to object to these insane forms of theft.