A broad coalition spanning the U.S. Justice Department, Wall Street's largest lobbies, and leading crypto firms has filed briefs in Illinois state court supporting a legal challenge to the state's Digital Asset Tax Act.
The lawsuit, brought by the Crypto Council for Innovation and the Blockchain Association, seeks to strike down and permanently block the tax. Supporters filing briefs include the Justice Department, the U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association, and crypto organizations led by the DeFi Education Fund, Andreessen Horowitz, Paradigm, and Uniswap.
How the Tax Works
Illinois' tax imposes a 0.2% levy on the full value of a digital asset each time an Illinois customer trades, transfers, or stores it through a broker. Crucially, the tax applies even when there is no sale, gain, or change in ownership.
Critics argue the tax is uniquely punitive because Illinois imposes no comparable levy on dollars, gold, stocks, or other assets, and no other state has enacted similar legislation.
Arguments Against the Tax
On November 6, the Justice Department filed a statement of interest arguing the tax undermines federal policy and U.S. leadership in digital assets, calling it vague and discriminatory for singling out crypto.
The U.S. Chamber of Commerce and the Securities Industry and Financial Markets Association warned the tax extends beyond crypto-native platforms to traditional banks, custodians, and advisers increasingly offering digital asset products.
A separate brief filed November 11 by crypto firms, including Aave Labs, Chainlink Labs, Solana Policy Institute, Phantom, and others, argued the law's definitions are so vague they could apply to software developers and decentralized protocols that hold no customer funds and have no way to identify users.
The brief noted that an estimated 2.64 million Illinoisans hold digital assets, the fifth-highest total of any state.
Current Status
Illinois agreed in October to pause the tax until July 1, 2027, allowing time for the court case to proceed.
