A diverse coalition, including the U.S. Department of Justice, the Chamber of Commerce, and major crypto firms, has joined a legal challenge against Illinois' Digital Asset Tax Act. The lawsuit, initiated by the Crypto Council for Innovation and the Blockchain Association, seeks to permanently invalidate the tax.
The contested law imposes a 0.2% levy on the total value of digital assets whenever they are traded, transferred, or stored through a broker. This applies even in the absence of a sale or change in ownership. Critics highlight that no similar tax exists for stocks, gold, or traditional currency in the state.
On November 6, the Justice Department filed a statement of interest, arguing the tax is discriminatory and undermines federal policy. The Securities Industry and Financial Markets Association also warned that the tax impacts traditional banks and custodians that offer digital asset products, not just crypto-native platforms.
A separate brief filed on November 11 by organizations including Andreessen Horowitz, Paradigm, and Uniswap claims the law's definitions are overly broad. They argue the tax could affect software developers and decentralized protocols that do not hold customer funds. Approximately 2.64 million Illinois residents hold digital assets.
The legal battle began in August. In October, Illinois officials agreed to suspend the enforcement of the tax until July 1, 2027, to allow the court proceedings to continue.
