The Digital Chamber, a major crypto lobbying group in the U.S., has sued the State of Illinois to stop the first state-level digital asset transaction tax before it starts. The group claims the new Digital Asset Tax Act is unconstitutional, unfairly targets blockchain transactions, and goes against federal law. The lawsuit asks the court to prevent the tax from being enforced when it is set to begin in January 2027.
The case was filed in the Circuit Court of Sangamon County against the Illinois Department of Revenue. The complaint says the law breaks the uniformity and due process rules in the Illinois Constitution, the Commerce Clause of the U.S. Constitution, and the federal Internet Tax Freedom Act, which bans unfair taxes on online commerce.
Lawmakers added the Digital Asset Tax Act to Illinois’ 2027 budget just before the legislative session ended. The law creates a 0.2% tax on digital asset transactions, such as exchanges, transfers, and some storage activities involving Illinois customers. The tax affects businesses in Illinois or those with over $100,000 in digital asset service receipts. Officials think it could bring in about $60 million each year.
The Digital Chamber says the law unfairly targets blockchain technology, while similar transactions in traditional finance are not taxed. The complaint also points out that the tax does not separate profitable from loss-making transactions, realized from unrealized gains, or transfers that change ownership from those that do not. It only looks at whether blockchain is used.
The group also thinks the law is written so broadly that it could affect more than just cryptocurrency trading. They warn that enterprise blockchain, tokenized cloud computing, and even some artificial intelligence services might be included, causing confusion for businesses that were not meant to be taxed.
🧵1/ Today we filed suit in Sangamon County, IL, to stop the Digital Asset Tax Act. No one should be taxed differently because of how ownership of digital assets is recorded or transferred. pic.twitter.com/pv3J3FPybM
— The Digital Chamber (@DigitalChamber) July 21, 2026
Digital Chamber CEO Cody Carbone said the tax was added to the state budget at the last minute and did not get enough discussion. He explained that the lawsuit is meant to protect both consumers and the Chamber’s 250-plus member companies from what they see as an unfair tax. Some members have already started spending money to get ready for the law, even though it will not take effect until next year.
The lawsuit asks the court to declare the Digital Asset Tax Act unconstitutional and to stop Illinois from enforcing it. If the court grants temporary relief, the tax could be delayed while the case continues. If not, crypto businesses serving Illinois customers will need to get ready before the January 2027 deadline. Many are watching this case, as it could influence how other states tax digital assets in the future.
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