Blockchain Association and Crypto Council Challenge Illinois Digital Asset Tax Act

The Blockchain Association and the Crypto Council for Innovation have jointly filed a lawsuit in Illinois state court seeking to block the state’s Digital Asset Tax Act. The law would impose a 0.2% tax on the value of digital‑asset transactions beginning Jan. 1, 2027.

Legal basis of the challenge

The plaintiffs argue the tax violates three legal principles:

• Dormant Commerce Clause – they contend the tax places an undue burden on interstate commerce because crypto transactions often cross state and national borders.
• Internet Tax Freedom Act – they claim the tax discriminates against internet‑based financial activity, which the federal law restricts.
• State due‑process protections – they assert the tax may lack proper procedural safeguards.

Potential impact

If upheld, the Illinois tax could serve as a model for other states seeking to levy transaction‑level taxes on digital assets. Conversely, a successful challenge could limit the scope of state‑level crypto taxation.

Current status

The lawsuit was filed on Aug. 21, 2024. No court ruling has been issued, and the tax remains scheduled to take effect on Jan. 1, 2027. The case may take considerable time to resolve.