The Digital Chamber sued Illinois to block a 0.2% digital asset tax on gross transaction volume. The law takes effect Jan. 1, 2027.
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The Digital Chamber filed suit Monday against the state of Illinois, seeking to block a digital asset tax set to take effect Jan. 1, 2027. The complaint, filed in Sangamon County Circuit Court, argues the levy discriminates against blockchain-based transactions by imposing a 0.2% tax on the gross value of exchange, custody and transfer operations handled by licensed brokers.
The trade group said the law, signed by Governor JB Pritzker in June as part of the state budget, applies to entities with annual gross receipts of at least $100,000 from crypto activity involving Illinois users. Unlike capital gains taxes, the charge is calculated on total transaction volume, regardless of whether the user posted a profit or a loss.
Cody Carbone, CEO of The Digital Chamber, said the suit aims to protect consumers from "arbitrary tax policies." The filing alleges the provision violates the Commerce Clause, due process protections and the federal Internet Tax Freedom Act. The organization also noted the tax language was added during a late-night session before the final budget vote, without prior public hearings or open debate.
Industry groups warn the precedent could extend beyond crypto. The lawsuit argues similar justifications could later be used to tax artificial intelligence infrastructure or cloud payment networks.
Illinois officials have not commented on the litigation. Several crypto advocacy groups had asked lawmakers to remove the clause before it passed.
The case is one of several legal challenges to state-level crypto tax measures. Kalshi, the regulated prediction market, sued Illinois last month over a separate tax targeting sports wagering contracts, and broader industry pushback has emerged as states move to tax digital asset transactions by volume rather than gain.
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