Two crypto advocacy groups have joined the legal fight against Illinois’ new 0.2% tax on digital asset transactions, filing a complaint that challenges the first-in-the-nation levy on constitutional grounds.
A Second Legal Challenge
The Crypto Council for Innovation (CCI) and the Blockchain Association filed a complaint on Friday, August 21, in Sangamon County Court, according to CoinDesk. The filing adds to a separate lawsuit brought last month by The Digital Chamber, a trade group representing blockchain businesses. Together, the cases mark a coordinated push by the industry to block the state’s tax before it takes effect, with advocacy organizations now aligned across two parallel legal actions.
What the Tax Does
Illinois introduced the 0.2% tax on digital asset transactions as part of its state budget legislation earlier this year, becoming the first U.S. state to impose such a levy. The measure was designed to generate revenue from the growing cryptocurrency sector. The tax, which some observers have described as a transaction privilege tax, applies to companies based in Illinois or serving customers in the state that report gross revenue of at least $100,000, and it is scheduled to take effect in 2027. Industry advocates have criticized the measure, arguing that it singles out digital assets for treatment that traditional financial transactions do not face and that it could burden ordinary users if the cost is passed through to them.
The Legal Arguments
The plaintiffs argue that the tax violates the U.S. Constitution and the Illinois Constitution, as well as the federal Internet Tax Freedom Act, which bars discriminatory taxes on electronic commerce. CCI CEO Ji Kim said the levy imposes a uniquely punitive burden on digital assets based solely on the underlying technology rather than the nature of the transaction, and that taxing only digital asset activity while exempting traditional financial transactions amounts to picking winners and losers through the tax system.
What Happens Next
The case is in its early stages, and the court has not yet ruled. A ruling in the plaintiffs’ favor could invalidate the tax and influence how other states approach taxing digital assets, but no outcome has been determined and the litigation is still pending. Legal observers note that the constitutional questions raised by the suit could eventually reach higher courts, though there is no guarantee the case will advance beyond the trial court. For now, crypto businesses operating in Illinois face uncertainty as the litigation proceeds.
For additional context, readers can review a practical BlockchainReporter guide to blockchain interoperability and our guide to the Crypto Travel Rule.
