The Digital Chamber sues Illinois to block a 0.2% tax on digital asset transactions, the first state-level levy of its kind. The lawsuit argues the tax discriminates against blockchain businesses and was slipped into a budget bill without hearings.
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The Digital Chamber filed a lawsuit Wednesday in Illinois to block a 0.2% privilege tax on digital asset transactions, the first state-level levy of its kind. The tax applies to the gross value of exchanges, transfers, custody, and storage – regardless of whether the customer made or lost money – making it structurally different from income or capital gains taxes.
The measure was tucked into Senate Bill 3019, part of Illinois' fiscal 2027 budget, and signed by Governor J.B. Pritzker in mid-June. It targets any service provider with a physical presence in the state or more than $100,000 in annual revenue from Illinois customers. The tax is set to take effect Jan. 1, 2027, and is expected to raise roughly $60 million a year.
The Digital Chamber and the Illinois Blockchain Association argue the tax was slipped into omnibus legislation without public hearings or industry consultation. They say it will push businesses, talent, and investment out of the state. No other U.S. state taxes digital asset transactions at the gross-transaction level. Stocks, bonds, and other traditional financial instruments face no equivalent burden, a disparity the plaintiffs say violates the Dormant Commerce Clause by discriminating against a specific technology class.
"The tax was drafted without any stakeholder input and buried in a budget bill," said a Digital Chamber spokesperson. "It penalizes routine operations like wallet transfers or stablecoin conversions, which are not comparable to taxable events in any other industry."
The lawsuit seeks an injunction before the Jan. 1 effective date. Legal observers point to the Dormant Commerce Clause as the strongest constitutional argument: states cannot unduly burden interstate commerce, and a transaction tax on digital assets that exempts stocks and bonds may not survive scrutiny. Similar constitutional challenges have been raised against other elements of the same budget bill, including new digital advertising fees.
Proponents of the tax view it as a pragmatic way to close a budget gap. The $60 million in projected revenue contributes to a larger package of more than $800 million in new taxes and fees. The Illinois Department of Revenue has not yet issued formal guidance on how the tax would be collected or audited.
The Digital Chamber, founded in 2014, represents more than 250 members across the blockchain industry. The group had urged Pritzker to issue a line-item veto, arguing the tax could undermine recent pro-crypto steps Illinois has taken, such as consumer protection laws for exchanges and kiosks.
A ruling is not expected before late 2026. The case could set a precedent for how states tax digital assets at the transaction level, and several other states are watching the outcome, according to two industry lobbyists familiar with the discussions.
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