The Digital Chamber has filed a lawsuit against the State of Illinois over its newly approved tax on cryptocurrency transactions, arguing the measure unfairly singles out digital asset users and should be struck down before it takes effect.
The suit, filed Tuesday in the Circuit Court of Sangamon County, challenges a planned 0.2 percent tax on crypto trades that Illinois plans to impose in 2027.
The blockchain advocacy group has filed a lawsuit naming Illinois Attorney General Kwame Raoul and Department of Revenue Director David Harris as defendants, claiming the tax was inserted into the state’s fiscal 2027 budget without meaningful public discussion or input from the crypto industry.
Why the lawsuit?
The Digital Chamber argues the measure discriminates against digital assets compared to other forms of property.
“The lawsuit argues no one should be taxed differently depending on how ownership is recorded or transferred,” the organization said in a blog post about the legal challenge.
In plain language, this tax is a form of discrimination against those who trade in digital assets. “This tax is applied across the board, regardless of whether the investor actually makes a profit or even transfers ownership.
The tax is unusual because it applies to certain crypto transactions, regardless of whether an investor has made a profit or even transferred ownership in the traditional sense, the organization says.
The provision was included in Illinois’ fiscal year 2027 budget bill, signed into law by Gov. JB Pritzker in June.
The new rules will require crypto brokers to collect the 0.2% tax on qualifying transactions. Those that don’t comply could be fined and, in some cases, face criminal charges.
The Digital Chamber says it would be an unwarranted burden on the digital asset industry to impose the burden on brokers and penalise them for non-compliance.
Crypto tax still a big debate
The lawsuit is the latest in a series of congressional hearings and bills about how to tax and regulate cryptocurrencies.
With the rise of crypto adoption, some states have put policies in place to draw in blockchain and digital asset companies, while others have ramped up oversight or levied new taxes.
Industry groups have opposed measures they say treat crypto differently from traditional financial assets, arguing that regulations should target the activity rather than the underlying technology.
The Digital Chamber says the new Illinois law does the opposite by creating a tax that’s only for digital asset transactions.
The organization is asking the court to strike down the tax and prevent state officials from enforcing it before it takes effect in 2027.
The case’s outcome could be watched closely by policymakers and the crypto industry as more U.S. states look for ways to regulate and generate revenue from digital assets. Should the lawsuit prevail, it could impact how crypto tax proposals at the state level are crafted nationwide.
