Illinois crypto groups sue to block 0.2% digital asset tax

The Blockchain Association and the Crypto Council for Innovation (CCI) have filed a lawsuit against the state of Illinois to block the Digital Asset Tax Act. The legislation, scheduled to take effect on January 1, 2027, imposes a 0.2% tax on the total value of digital assets involved in specified exchanges, transfers, or storage services.

Unlike traditional capital gains taxes that target profits, this levy is based on the gross value of the assets. Plaintiffs argue this could result in taxation even when a customer “buys nothing, sells nothing, gains nothing, and transfers no ownership,” such as during simple wallet transfers or custody services.

The legal challenge, filed in the Sangamon County Circuit Court, names Illinois Revenue Director David Harris, Attorney General Kwame Raoul, and Sangamon County State’s Attorney John Milhiser as defendants. The complaint alleges several constitutional and statutory violations, including breaches of the federal Internet Tax Freedom Act, the Commerce Clause, and the Illinois Uniformity Clause. The industry groups are seeking both preliminary and permanent injunctions to prevent the tax from being implemented.