Blockchain Association and CCI sue Illinois over Digital Asset Tax Act – Details

In a recent crypto market update, the Blockchain Association and the Crypto Council for Innovation (CCI) have legally challenged Illinois’s new Digital Asset Tax Act. The former argues that Illinois went beyond its constitutional authority by creating a tax specifically targeting digital-asset activity. 

The press release added, 

Our lawsuit asks the court to declare the Digital Asset Tax Act unlawful and enter preliminary and permanent injunctive relief barring the State from enforcing it.

Illinois goes against various clauses

Additionally, the lawsuit claims that the Illinois’s new Digital Asset Tax Act goes against the Dormant Commerce Clause. For those unaware, the latter is a legal doctrine derived from the U.S. Constitution’s Commerce Clause, which prevents individual states from creating tax or regulatory systems that unfairly discriminate against or place excessive burdens on interstate commerce.

Expressing discontent on the same, Ji Hun Kim, Chief Executive Officer, Crypto Council for Innovation, said, 

A tax on digital asset activity with no equivalent tax for traditional assets unlawfully picks winners and losers through the tax code.

Crypto community challenges Illinois

Their concern is that if one state creates a special tax on digital-asset activity, other states might follow and introduce their own rules and taxes. That could eventually create a fragmented system in which a company operating across the U.S. has to deal with a different digital-asset tax structure in every state.