[Digital Today reporter Yoonseo Lee (이윤서)] Illinois has disclosed detailed criteria for applying its 0.2 percent digital asset transaction tax.

Cointelegraph reported on Sept. 30, local time, that Illinois tax authorities released draft rules to implement the digital asset transaction tax and specified which transactions and assets would be covered.

The draft set out taxation standards for stablecoins and DeFi transactions. It classified stablecoins as "digital assets" and included them in the taxable category, while excluding non-fungible tokens (NFTs).

DeFi transactions are generally exempt, but the rules allow taxation when users pay fees as consideration for services. This includes protocol fees charged for operating and maintaining platforms. Network fees and swap fees paid only to liquidity providers are excluded from taxation.

Use of bridges can also be taxable. The draft defined bridge transactions carried out through digital asset intermediaries in exchange for payment as taxable exchange activities. Transfers from centralized exchanges to self-custody wallets could also be taxed if an exchange charges fees.

Under the standards, tax treatment could differ depending on how a transaction is structured, even when the same digital asset is transferred. It means a transaction that users viewed as simply moving where assets are stored could be taxable depending on whether an intermediary service is involved and how fees are charged. It becomes important not only where assets are moved, but also which services are used and whether costs are paid during the transfer.

Illinois tax authorities said the draft presented detailed criteria, including the range of taxable transactions and digital assets. DeFi transactions are generally exempt, but the authorities said they would make exceptions when there is an exchange of "valuable consideration". They also left room to tax bridge use and transfers to self-custody wallets if fees are charged under the transaction structure.

Industry attention is focused on the public comment process ahead of implementation. Illinois tax authorities plan to accept comments on the draft through Oct. 30. With tax boundaries unclear for transaction types such as stablecoins, DeFi, bridges and self-custody transfers, the industry may seek to narrow the scope of application or clarify exception conditions. Attention is also on how much these demands will be reflected in the final standards.

The draft shows that U.S. state-level cryptocurrency tax standards are being broken down beyond simple buying and selling to include DeFi and on-chain asset movements. A key issue will be which fees will be recognized as consideration that forms the basis for taxation. It is also expected to become important to draw detailed lines between which transactions involving self-custody wallet transfers and bridge use are exempt and which become taxable under specific conditions.