U.S. crypto industry goes to court to block Illinois 0.2 percent tax on coin trades

U.S. cryptocurrency industry groups asked a court to urgently block Illinois' “0.2 percent digital asset tax” set to take effect next year. A legal fight is taking shape over the first U.S. state tax based on cryptocurrency transactions.

On Sept. 9, Cointelegraph reported that the Crypto Council for Innovation (CCI) and the Blockchain Association filed for a preliminary injunction in the Sangamon County Circuit Court to stop the digital asset tax law from taking effect. The two groups filed a lawsuit on Aug. 21 already, arguing the law is unconstitutional.

A law signed by Governor JB Pritzker in June would, from Jan. 1, 2027, levy 0.2 percent of an asset's value when Illinois customers exchange, transfer or store cryptocurrency through a broker. The tax is based on the value of the asset involved in the transaction, not investment gains. The broker collects the tax from customers and pays it to the state government.

The industry argues that, with what is taxable still unclear, operators would have to spend millions of dollars to build systems. CCI and the Blockchain Association argue the law violates the U.S. Constitution's dormant commerce clause doctrine and due process, as well as the federal Internet Tax Freedom Act, and that they are already suffering harm that would be difficult to recover before it takes effect. These are the plaintiffs' current claims, and the court has not ruled.