Two leading crypto advocacy groups filed a lawsuit against Illinois officials on Friday, contesting a 0.2% tax on digital asset transactions scheduled to take effect in January 2027.
The Crypto Council for Innovation and the Blockchain Association filed the challenge in the Circuit Court of the Seventh Judicial Circuit for Sangamon County, arguing the tax violates multiple constitutional provisions, including the U.S. Commerce Clause and the Internet Tax Freedom Act. The groups contend the levy, which applies to transaction volume rather than income, is unconstitutionally vague and imposes undue compliance burdens on residents and brokers.
In their filing, the organizations warned the tax could lead to duplicative taxation across state lines, creating uncertainty for consumers and businesses engaged in interstate digital commerce. Illinois Governor JB Pritzker signed the measure into law in June as part of the state’s fiscal 2027 budget, designating it as a “privilege tax.”
The lawsuit follows a similar challenge in July by the Digital Chamber, which argued the Illinois tax discriminates against digital asset users. Both cases reflect broader industry pushback against state-level crypto policies during an election year where regulatory stances may influence voter sentiment.
Separate litigation highlights additional regulatory tensions in Illinois. Prediction market platform Kalshi filed suit in July over a state law that took effect July 1, arguing it bans sports event contracts in violation of federal law by requiring state licensing. Governor Pritzker also issued an executive order in April prohibiting state employees from betting on such platforms, citing concerns over insider trading amid the expansion of online prediction markets.
