Crypto Groups Ask Illinois Court to Halt Digital Asset Tax

The Crypto Council for Innovation (CCI) and the Blockchain Association have asked an Illinois court to stop a new state tax on digital assets before it takes effect in January 2027.

The groups filed a motion for a preliminary injunction in Sangamon County Circuit Court, continuing their legal challenge against Illinois' Digital Asset Tax Act. They argue that the law violates federal and state protections and would force crypto businesses to spend millions of dollars preparing for rules they say remain unclear.

The law imposes a 0.2% tax on the value of digital assets involved in exchanges, transfers, or storage through a digital asset broker. Unlike conventional taxes, the levy is based on the value of the asset rather than the fee charged by the broker. The law also requires brokers to register, collect, and remit the tax and maintain records. Violations can carry civil and criminal penalties.

"The Act violates the federal Internet Tax Freedom Act by taxing internet commerce—activities involving digital assets—without taxing activities involving similar non-digital assets, such as using cash or buying gold," CCI and the Blockchain Association wrote in the filing. They also argued that the law could place an unfair burden on interstate commerce.