Key facts
- The Crypto Council for Innovation and the Blockchain Association are suing Illinois over its new 0.2% cryptocurrency tax.
Two digital asset advocacy groups, the Crypto Council for Innovation and the Blockchain Association, have filed a lawsuit challenging Illinois' new 0.2% tax on cryptocurrency transactions. They argue the tax violates the U.S. Constitution, state laws, and federal due process, citing concerns over vagueness and potential duplicative taxation.
The lawsuit challenges Illinois' new cryptocurrency tax on constitutional and due process grounds, potentially impacting digital asset taxation across states and highlighting the ongoing legal and regulatory battles faced by the crypto industry.
Two digital asset advocacy groups, the Crypto Council for Innovation (CCI) and the Blockchain Association (BA), have filed a lawsuit challenging Illinois' new 0.2% tax on cryptocurrency transactions. The tax, signed into law by Governor JB Pritzker in June as part of the state's fiscal year 2027 budget, is slated for enforcement in January 2027.
The lawsuit, filed in the Circuit Court of the Seventh Judicial Circuit for Sangamon County, asserts that the tax violates the U.S. Constitution, the state's constitution, federal and state due process laws, and the federal Internet Tax Freedom Act. The groups argue the tax is "unconstitutionally vague," placing an undue burden on residents and brokers to determine taxability under threat of penalties. They also contend that the tax, by taxing digital assets as applied to transaction volume rather than income, discriminates against digital commerce and creates the "specter of duplicative taxation" on interstate commerce.
Summer Mersinger, CEO of the Blockchain Association, stated that states have constitutional limits in fostering innovation and that Illinois cannot impose a tax regime that discriminates against digital commerce, creates uncertainty, and fragments the market. This legal challenge mirrors a similar lawsuit filed by the Digital Chamber in July, which also argued that the Illinois tax discriminates against digital asset transactions. These actions highlight the influence of digital asset groups in opposing state-level legislation, particularly in an election year where crypto policy could sway voters.