Crypto Advocacy Groups Challenge Illinois’ 0.2% Digital Asset Tax in Court

Two leading crypto advocacy groups have taken legal action against Illinois’ newly enacted 0.2% tax on cryptocurrency transactions, which is slated to take effect in January 2027.

Legal challenge filed

The Crypto Council for Innovation (CCI) and the Blockchain Association (BA) filed a complaint in the Circuit Court of the Seventh Judicial Circuit, Sangamon County, alleging that the tax breaches the U.S. Constitution, the Illinois Constitution, federal and state due‑process statutes, and the federal Internet Tax Freedom Act.

Grounds for the lawsuit

• Constitutional claim: The groups argue the tax violates the Commerce Clause by creating a risk of duplicate taxation on interstate digital commerce.
• Due‑process claim: They contend the tax is “unconstitutionally vague,” placing an unclear burden on residents and brokers and exposing them to civil and criminal penalties.
• State law claim: The tax is characterized as a “privilege tax” that treats transaction volume as taxable, rather than income.

Context and related actions

The lawsuit follows a similar filing by the Digital Chamber in July, which asserted that the tax discriminates against individuals transacting in digital assets. The legal actions occur amid broader disputes in Illinois, including a lawsuit by prediction‑market platform Kalshi over a law banning sports‑event contracts and an executive order prohibiting state employees from betting on such platforms.

Industry response

Summer Mersinger, CEO of the Blockchain Association and former CFTC commissioner, emphasized that while states have a role in fostering innovation, they must not impose tax regimes that discriminate against digital commerce or create market fragmentation.