Two cryptocurrency industry groups have sought to block Illinois’ upcoming 0.2% digital asset tax, arguing the law violates state and federal constitutional principles. The Blockchain Association, Crypto Council for Innovation, and The Digital Chamber filed a motion for a preliminary injunction in Sangamon County Circuit Court, claiming the tax would cause “irreparable harm” to firms and lacks necessary compliance guidance.
The Digital Asset Tax Act, signed into law by Governor JB Pritzker in summer 2023, is set to take effect in January 2027. It imposes a 0.2% levy on digital asset transactions, part of Illinois’ fiscal year 2027 budget. The 34-page legal motion asserts the law’s enforcement would force industry participants to spend millions on compliance efforts without clear directives, risking criminal penalties.
The groups cited constitutional concerns, alleging the tax infringes on federal authority and imposes undue burdens on businesses. A statement from the plaintiffs warned that even if compliance were achievable, the industry would face “irreparable harm” if the law proceeds. Illinois officials have not yet responded to requests for comment.
The lawsuit highlights growing tensions between regulators and the crypto sector over taxation frameworks. Similar disputes have emerged in other jurisdictions, with industry groups often challenging laws they argue lack clarity or proportionality. The outcome of the case could influence how states approach digital asset regulation in the coming years.
Written by Steven Cook
Regulation Desk
