Crypto coalition and DOJ challenge Illinois digital asset transaction tax
A coalition of 18 crypto firms, major business associations, and the U.S. Department of Justice are backing legal challenges against Illinois' proposed 0.2% digital asset transaction tax, arguing the statute is vague and impossible to enforce as written.
An alliance spanning decentralized finance firms, traditional business organizations, and the U.S. Department of Justice has moved to oppose Illinois' digital asset transaction tax in court, according to Decrypt and Cointelegraph. The state's Digital Asset Tax Act mandates that brokers collect a 0.2% levy on the value of any cryptocurrency exchanged, transferred, or held for an Illinois customer, regardless of whether the transaction generates a profit.[1][2][3][4][5]
Two consolidated lawsuits in Sangamon County circuit court—led by The Digital Chamber, the Blockchain Association, and the Crypto Council for Innovation—target the law ahead of its planned rollout. Outside parties including the DOJ, the U.S. Chamber of Commerce, and SIFMA have submitted briefs supporting the legal fight to strike down the statute.[1][3][6]
On Nov. 11, the DeFi Education Fund and 17 other companies and organizations, including Andreessen Horowitz, Paradigm Operations LP, and Uniswap Labs, asked the court for permission to file an amicus brief. The coalition argues that the statute and draft regulations overreach by treating decentralized software developers as brokers. Because non-custodial developers do not hold customer assets or track where transactions take place, the group warns they would face compliance duties they cannot physically fulfill.[1][4][7]
Opponents also contend that the tax is unconstitutionally discriminatory. Because Illinois does not levy equivalent fees on transactions involving stocks, bonds, or precious metals, the crypto coalition argues the law violates the federal Internet Tax Freedom Act and the Uniformity Clause of the Illinois Constitution.[1][7]
Key facts
- Illinois' Digital Asset Tax Act imposes a 0.2% tax on the value of digital assets exchanged, moved, or held by brokers for customers in the state.
- The transaction tax applies even when trades produce no profit.
- The U.S. Department of Justice, the U.S. Chamber of Commerce, and SIFMA filed briefs supporting legal challenges against the tax.
- A coalition of 18 crypto firms, including Andreessen Horowitz, Paradigm, and Uniswap Labs, asked an Illinois court on Nov. 11 for permission to file an amicus brief opposing the measure.
- The crypto coalition argues non-custodial developers lack user funds or location data necessary to comply with the tax collection requirements.
- Opponents claim the law violates the Illinois Constitution's Uniformity Clause and the federal Internet Tax Freedom Act because transactions in stocks, bonds, and precious metals are not subject to the same levy.
Sources · 7 sources
- UN
UnchainedArticle ·
18 Crypto Firms Seek to Join Court Fight Over Illinois’ 0.2% Crypto Tax Under Illinois’ Digital Asset Tax Act, a broker that exchanges, transfers or holds a digital asset for a customer in Illinois must collect 0.2% of the asset’s value each time. The tax, created by Public Act 104-468, is set by statute to begin Jan. 1, 2027. In October, Illinois officials and The Digital Chamber jointly asked the court to delay it to July 1, 2027, Cointelegraph reported , saying the Blockchain Association case’s status under the deal was unclear. Unchained could not confirm the court approved it. Commodity Futures Trading Commission Chairman Michael Selig called the law effectively a “sin tax” on blockchain technology in a July 1 op-ed . Two industry lawsuits, now consolidated in Sangamon County circuit court, challenge the law: one led by The Digital Chamber and one from the Blockchain Association and Crypto Council for Innovation. The defendants are Illinois Revenue Director David Harris, Attorney General Kwame Raoul and Sangamon County State’s Attorney John Milhiser. Get Unchained’s crypto news in your inbox with the free Unchained Daily newsletter . 18 Groups Seek to Weigh In On Nov. 11, the DeFi Education Fund and 17 other crypto organizations and companies asked the court for permission (leave) to file an amicus brief, where outsiders give a court their view. They include venture firm Andreessen Horowitz (a16z) , Paradigm Operations LP and Uniswap Labs , which contributes to the development of the Uniswap Protocol. The plaintiffs don’t oppose the request. The DeFi Education Fund announced it Nov. 12. Unchained found no order granting it. The proposed brief centers on decentralized finance (DeFi), trading and lending apps run by code on a blockchain, not a company holding customers’ money. The groups argue the Act’s definitions are vague and overbroad, and that developers of software people use to transact for themselves “have no customers to collect from, no assets to remit from, and no way to know where a transaction occurred.” The Draft Rules Argument The groups point to the Revenue Department’s Sept. 28 draft rules, which they say stretch “broker” to certain decentralized exchanges, “directly contrary to the proscriptions of the Act and incorporated federal regulations.” The brief notes the federal rule excludes anyone “solely” validating transactions or providing non-custodial wallets, apps where users hold their own keys. The brief argues the draft shows that vagueness at work: developers and providers “that lack custody of user assets” could face duties they cannot carry out. Reissuing the rules wouldn’t help, it adds, since the vagueness is “baked into the statute.” The groups also argue the tax discriminates, because Illinois doesn’t tax the same activity with stocks, bonds or precious metals. They say that breaks the Illinois Constitution’s Uniformity Clause and the federal Internet Tax Freedom Act , and ask the court to find the Act “unlawful and unenforceable.” Related Listen: Crypto’s Clarity Act Collapses. Two Days Later, the SEC Introduces Its Innovation Exemption The post 18 Crypto Firms Seek to Join Court Fight Over Illinois’ 0.2% Crypto Tax appeared first on Unchained .
Open source - CT
Coin TelegraphArticle ·
US Justice Department, business groups and DeFi firms challenge Illinois crypto tax Industry groups argued in court filings that Illinois’ crypto tax, which applies even when a transaction yields no profit, could raise compliance costs and violate federal law.
Open source - DE
DecryptArticle ·
Illinois Crypto Tax Draws Unlikely Alliance of DOJ, Banks and DeFi The DOJ, the U.S. Chamber of Commerce, SIFMA and a crypto coalition led by a16z, Paradigm and Uniswap filed briefs backing a lawsuit to strike down the state’s 0.2% levy on digital asset transactions.
Open source - LS
Laura Shin@laurashinPost on X ·
A coalition of 18 crypto groups and companies, including Andreessen Horowitz and Uniswap Labs, asked an Illinois court on Nov. 11 to let them weigh in against the state's new tax on digital asset transactions. The levy would charge brokers 0.2% of the value of any crypto they exchange, move or hold for an Illinois customer. https://t.co/UDAroltyJx
Open source - CO
Cointelegraph@CointelegraphPost on X ·
🇺🇸 LATEST: The US Justice Department, business groups and DeFi firms have backed legal challenges to Illinois’ 0.2% digital asset tax, which applies even when transactions generate no profit. https://t.co/WJQ7V1UcTo
Open source - CO
CoindeskArticle ·
Illinois crypto tax is impossible to enforce as written, crypto industry tells court The legal battle to head off the crypto transaction tax in Illinois has drawn up a hefty roster of industry opposition, and they're saying the tax won't work.
Open source - CN
crypto.news@cryptodotnewsPost on X ·
JUST IN: 18 crypto companies push back against Illinois' proposed digital asset tax in court The industry argues the 0.2% levy is discriminatory and too vague to enforce, warning that it could impose tax collection duties on non-custodial developers and providers who cannot access users' funds or transaction data.
Open source