Lobby Groups Ask Judge to Pause Illinois Crypto Tax
CCI and the Blockchain Association want the 0.2% tax on digital asset transactions to take effect only in 2027. The case centers on constitutional objections and the cost of compliance for crypto companies.
Key Takeaways
- The Crypto Council for Innovation and the Blockchain Association are asking a judge in Illinois to temporarily put the new crypto tax on hold.
- The lobby groups say companies are already spending money on compliance systems while the lawsuit over the Digital Asset Tax Law is still ongoing.
- The 0.2% tax on digital asset transactions is set to take effect on January 1, 2027, and the industry says it is facing legal challenges.
The Crypto Council for Innovation and the Blockchain Association have asked a judge in Illinois to temporarily put the new crypto tax on hold before it takes effect. The lobby groups say their members are already spending money to build systems for a tax whose outcome is still up in the air in court.
Lawsuit Over New Tax
The two organizations had already gone to court last month to try to block the Digital Asset Tax Law. In this new step, they are now asking for a preliminary injunction from the Sangamon County Circuit Court so the law cannot be enforced yet while the case moves forward.
The tax was passed at the end of Illinois' legislative session and is set to take effect on January 1, 2027. It is a 0.2% tax on digital asset transactions for parties based in Illinois or providing services there and with more than $100,000 (€86,100) in gross revenue.
According to the filing, the companies involved are already facing serious and irreparable harm because they have to invest in compliance systems. CCI CEO Ji Hun Kim said companies have to spend millions to build systems for a tax that they say violates constitutional rights, while it is not even clear what exactly is being taxed and at what point.
Why the Industry Objects
The lobby groups are largely repeating their earlier arguments. According to them, the federal Internet Tax Freedom Act and the U.S. Constitution are being violated because Illinois treats digital assets differently from other financial services. The Digital Chamber backs that view and says the law unfairly singles out blockchain transactions while similar traditional financial activities are left alone.
The filing also points out that under Illinois' existing tax rules, transactions and services around financial assets are usually not taxed this way. Normally, only income and capital gains are taxed there, not the underlying transactions themselves.
Blockchain Association CEO Summer Mersinger said Illinois would lose little by waiting during the lawsuit, since the state cannot use the expected revenue for now anyway. She also warned that other states could follow this example if Illinois wins.
Why It Matters for Crypto Companies
For European crypto readers, this case shows how quickly tax rules can turn into a broader debate about oversight, compliance, and equal treatment of digital assets. For international crypto exchanges too, a ruling like this could matter, because rules can vary a lot from state to state or country to country, and that can have a big impact on the cost of offering services. That kind of legal pressure is showing up elsewhere too: in India, offshore platforms recently received warnings because they were said not to be following local AML requirements.
