Crypto Groups Escalate Legal Challenge Against Illinois Digital-Asset Tax

Two major U.S. crypto industry groups are escalating their legal challenge against Illinois’ new digital-asset tax, asking a state court to block the measure before it takes effect.

The Crypto Council for Innovation and Blockchain Association filed a motion for a preliminary injunction in Sangamon County Circuit Court on September 9, seeking to prevent enforcement of the 0.2% tax scheduled to begin on January 1, 2027.

Industry Groups Seek Injunction Ahead of 2027 Tax

The groups argue that the tax is already creating compliance costs for digital-asset companies that are being forced to build systems before the legal dispute is resolved. They say member companies could spend millions of dollars preparing to comply with a law they believe is unconstitutional.

The legal challenge follows a lawsuit filed by the two organizations last month, alongside a separate challenge brought by The Digital Chamber. The groups argue that federal law and the U.S. Constitution preempt Illinois’ tax, including through the federal Internet Tax Freedom Act.

The industry groups also contend that Illinois is treating digital assets differently from other financial assets. Unlike conventional financial transactions, the Illinois measure would impose a 0.2% tax on digital-asset business activity involving entities with more than $100,000 in gross receipts.

Illinois Case Could Set Precedent for Other States

The dispute could have implications beyond Illinois. Blockchain Association CEO Summer Mersinger warned that other states could attempt similar measures if Illinois succeeds in defending the tax.

The case therefore represents more than a dispute over a single state tax. For the U.S. crypto industry, the outcome could help determine how far individual states can go in imposing transaction-related taxes on digital-asset businesses as federal lawmakers continue to debate a broader regulatory framework.

The court's decision on the preliminary injunction could determine whether the industry has to begin building toward the tax's January implementation while the broader legal challenge proceeds.