The Digital Chamber sued Illinois to block the 0.2% digital asset tax, arguing it violates the Constitution and the Internet Tax Freedom Act.
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The Digital Chamber sued Illinois on Tuesday, asking a state court to block the 0.2% tax on digital asset transactions before it takes effect. The trade group's complaint, filed in Sangamon County Circuit Court, argues the tax violates the Illinois Constitution, the U.S. Constitution, and the federal Internet Tax Freedom Act.
The tax was tucked into Senate Bill 3019, a bill that started as a narrow amendment to the Illinois Finance Authority Act covering agricultural financing. A floor amendment gutted that language and replaced it with an omnibus budget bill carrying the tax provision, according to the complaint. The Digital Chamber argues the measure was never introduced or debated as its own bill.
Kalshi, the prediction market platform, already filed a separate lawsuit against Illinois over a different provision in the same SB 3019 package – one requiring prediction markets to hold a state gambling license. Two lawsuits against the same bill in one month.
The Hypothetical at the Heart of the Case
The complaint lays out a hypothetical: a man named Steve Doe splits time between Austin and Chicago and once registered his crypto accounts using a Chicago mailing address. He buys coffee with a stablecoin debit card and moves governance tokens to vote in an online protocol, all while never setting foot in Illinois. Under the new law, the old Chicago address is enough to create a presumption that each transfer is an Illinois transaction, taxable individually. Failure to comply is a Class 3 felony.
The Digital Chamber's core argument: "it distinguishes only between traditional financial infrastructure and blockchain infrastructure." The complaint alleges violations of the state's Uniformity Clause and the Commerce Clause, and separately argues the tax is preempted by the Internet Tax Freedom Act and violates due process protections under both the state and federal constitutions.
Michael Selig, chairman of the Commodity Futures Trading Commission, has called the fee a "sin tax" and said it threatens Chicago's status as a financial hub. The CFTC has one commissioner and all of crypto – a point Selig has made repeatedly in the context of state-level crypto regulation.
The Digital Chamber's complaint warns that if Illinois can tax blockchain technology because it is a new method of recording transactions, the same logic could justify taxing AI-powered settlement or cloud-based payments in other states. That argument extends the stakes beyond crypto brokers to any technology that changes how financial records are kept.
The case now goes before a court in Springfield, which will decide whether Illinois can tax identical properties differently depending on which ledger the property is recorded in.
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