Crypto firms sue Illinois, opposing the implementation of a digital asset tax

TechFlow reports, on August 25, according to Cointelegraph, the Crypto Council for Innovation (CCI) and the Blockchain Association (BA) have filed a lawsuit with the Seventh Judicial Circuit Court of St. Clair County challenging Illinois' planned 0.2% cryptocurrency tax set to take effect in January 2027. Signed into law by Governor JB Pritzker this past June, the measure is part of the Fiscal Year 2027 Budget and imposes the tax under the label of a "franchise tax" on the transaction volume rather than income from cryptocurrencies.

In their complaint, the two organizations allege that the tax heavily violates the U.S. Constitution, the state constitution, and due process laws, while also violating the Internet Tax Freedom Act. CCI and BA argue that the tax regime requires residents and brokers to independently determine complex tax obligations, facing severe criminal and civil penalties otherwise, which constitutes "unconstitutional vagueness."

Additionally, both parties cite the Commerce Clause of the Constitution to argue that the tax discriminates against digital commerce, warning that it could trigger double taxation across multiple states and undermine a unified national digital market. Blockchain Association CEO Summer Mersinger warned that this move will create significant uncertainty for consumers and businesses, ultimately hindering innovation and leading to market fragmentation.