Crypto groups challenge Illinois' 0.2% digital asset tax
Key points
- Crypto industry groups, business organisations and the US Justice Department have challenged Illinois' Digital Asset Tax Act.
- The law imposes a 0.2% tax on digital asset values during qualifying transactions, including transfers and storage.
- Illinois has paused implementation until 1 July 2027 as legal challenges continue.
Business, securities and crypto groups have backed a challenge to Illinois' 0.2% digital asset tax.
The coalition includes the US Chamber of Commerce, SIFMA, DeFi Education Fund, Andreessen Horowitz, Paradigm and Uniswap.
“This tax is unclear, discriminatory, unconstitutional, and harmful to the future of finance,” said industry representatives Ji Hun Kim and Ashok Pinto.
The legislation applies a 0.2% tax whenever Illinois customers exchange, transfer or store digital assets through brokers.
The US Justice Department argues the law conflicts with federal policy and creates unfair obligations for digital asset businesses.
The industry coalition argues the proposed rules could extend taxation to software developers and decentralised protocols without customer custody.
An estimated 2.64 million Illinois residents hold digital assets, making the state the fifth-largest market by ownership.
Illinois has paused implementation until 1 July 2027, leaving the court challenge central to the state's digital asset tax policy.
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