Illinois crypto groups sue to block 0.2% digital asset tax

The Blockchain Association and the Crypto Council for Innovation filed a lawsuit on August 21 in the Seventh Judicial Circuit Court, Sangamon County, seeking to halt Illinois’ newly enacted 0.2% digital‑asset tax slated to take effect on January 1, 2027.

Key provisions of the tax

Illinois Public Act 104‑468 imposes a 0.2% levy on the value of digital assets involved in specified exchanges, transfers, or storage services provided to Illinois customers. The tax is calculated on asset value, not on profit or broker fees, meaning even wallet‑to‑wallet transfers between the same owner could be taxable. Brokers must register and begin collecting the tax by the start of 2027, with the first remittances due in February.

Legal claims filed by the plaintiffs

The complaint alleges seven violations, including:

• Discriminatory treatment under the federal Internet Tax Freedom Act.
• Violations of the dormant Commerce Clause.
• Due‑process deficiencies under federal and Illinois law.
• Vagueness in definitions of valuation, storage, and business presence.
• Contravention of the Illinois Constitution’s Uniformity Clause.
• Improper delegation of taxing authority.
• Procedural defects in the budget package’s enactment.

The plaintiffs seek both preliminary and permanent injunctions and a declaration that the Digital Asset Tax Act is invalid.

Parallel litigation and legislative response

A separate suit filed by the Digital Chamber on July 21 challenges the same tax, making this the second industry case in Sangamon County. No court order has yet consolidated the cases.

Republican Representative John Cabello introduced House Bill 5798 on June 22, proposing an immediate repeal of the tax. The bill has not progressed beyond filing and has received no committee or floor votes.

Potential outcomes

Businesses face three possible scenarios before the 2027 deadline:

1. A court grants an injunction, halting enforcement.
2. The legislature repeals the tax via HB 5798.
3. The tax proceeds as scheduled, generating an estimated $60 million in annual revenue.

The next court filings will determine whether Illinois can defend the tax and whether the plaintiffs obtain expedited relief.