The crypto industry has stepped up its legal fight against Illinois over a new 0.2% tax on digital asset activity, with the Crypto Council for Innovation and the Blockchain Association filing a lawsuit against the state. The groups argue that the tax unfairly targets businesses that transact or store crypto for customers in Illinois.
Their lawsuit joins an earlier legal challenge filed by the Digital Chamber and claims the tax violates both federal and state constitutional protections. The new tax applies to businesses based in Illinois or those providing services to Illinois residents, provided their total receipts exceed $100,000.
Today, @Crypto_Council and @BlockchainAssn filed a lawsuit challenging the State of Illinois’s Digital Asset Tax Act. A statement from CEOs @_jikim and @SummerMersinger follows.
Press release:https://t.co/HLCy1IaNg1 pic.twitter.com/q3RsnkHeo3
— Blockchain Association (@BlockchainAssn) August 21, 2026
Critics say the problem is not simply the size of the tax. They argue that the structure of the levy could create a significant burden because it is based on transactions rather than profits.
That means a crypto company could potentially owe the tax even if it loses money on its digital asset activities. Industry groups say this makes the tax fundamentally different from how many traditional businesses are treated.
The latest lawsuit was filed in Sangamon County. The groups are seeking to stop the tax before it takes effect and are challenging it under the US Constitution, the Illinois Constitution and the federal Internet Tax Freedom Act.
Ji Kim, who leads the Crypto Council for Innovation, said the tax singles out digital assets because of the technology behind the transactions rather than the economic substance of those transactions.
The Blockchain Association has raised a similar concern. Its CEO, Summer Mersinger, argued that Illinois should not create a tax system that discriminates against digital commerce or creates uncertainty for businesses operating in a national market.
The dispute could have consequences beyond Illinois. Crypto companies often operate across state lines, meaning a state-specific tax can affect businesses whose customers and operations span several jurisdictions.
Supporters of the tax, meanwhile, see it as a potential source of additional revenue. The levy has been estimated to raise as much as $60 million for Illinois’ budget.
The legal challenge is therefore likely to focus on both constitutional questions and the practical impact of the tax on digital asset businesses.
For the crypto industry, the concern is also about precedent. If Illinois succeeds in imposing a transaction-based tax specifically on crypto businesses, other states could consider similar measures.
The lawsuits could ultimately force courts to examine a broader question: should digital assets face a different tax treatment simply because transactions are conducted using blockchain technology?
The answer could have implications for crypto companies, investors and consumers well beyond Illinois.
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