- Digital Chamber seeks to block Illinois’ 0.2% Digital Asset Tax before 2027.
- Lawsuit claims blockchain transactions face unfair and discriminatory taxation.
- Case challenges the tax under constitutional and federal commerce protections.
The Digital Chamber has filed a lawsuit against Illinois to block the state’s Digital Asset Tax Act before it takes effect in January 2027. The crypto trade association argues the law unfairly targets blockchain-based transactions by imposing a tax based on the technology used to record ownership instead of the underlying economic activity.
Digital Chamber Says Illinois Tax Unfairly Targets Blockchain
The Digital Chamber filed the complaint in Sangamon County, Illinois, seeking to halt enforcement of the Digital Asset Tax Act before its scheduled January 1, 2027, implementation.
The organization said the measure unfairly discriminates against digital assets by taxing transactions differently because blockchain technology records ownership.
The lawsuit argues that identical financial transactions should receive equal tax treatment regardless of whether they use blockchain or traditional financial infrastructure.
According to the filing, the law imposes a unique burden on digital asset users without considering whether investors earned profits or suffered losses.
🧵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
The organization also claimed the tax provision entered Illinois’ state budget without sufficient public review. It said lawmakers added the measure the night before the final budget vote, leaving no opportunity for hearings or public debate.
Digital Chamber CEO Cody Carbone said the lawsuit seeks to protect consumers and member companies from an unfair tax policy.
“Today we are asking the courts to protect consumers and our members and stop this unfair tax in Illinois. Taxes should be carefully considered, not only for the revenue they produce but for the fairness of those being taxed. That was not the case here, as the provision slipped into legislation the night before the bill’s final consideration,” Carbone stated.
The Digital Chamber added that no taxpayer should face different treatment simply because ownership of digital assets is recorded or transferred through blockchain technology.
Industry Raises Constitutional and Economic Concerns
Illinois Governor JB Pritzker signed the Digital Asset Tax Act into law in June as part of the state’s fiscal 2027 budget. The legislation introduces a 0.2% tax on qualifying digital asset exchanges, transfers, custody, and storage services performed by certain brokers.
The law generally applies to businesses generating at least $100,000 in annual gross receipts from covered digital asset activities involving Illinois customers. Unlike traditional capital gains taxes, the levy applies to transaction value instead of investment profits.
The lawsuit argues that the measure violates constitutional protections, including equal taxation principles, due process rights, the Commerce Clause, and the federal Internet Tax Freedom Act. The complaint also asks the court to declare the law invalid and prevent its enforcement.
The Digital Chamber warned that allowing technology-specific taxes could create broader consequences beyond cryptocurrency. The organization argued similar taxes could later target artificial intelligence settlement systems, cloud-based payment networks, or other emerging technologies using comparable reasoning.
Industry opposition has continued since the law’s approval. Several crypto organizations previously urged Illinois officials to remove the provision before its passage, while critics questioned how routine blockchain transactions would be taxed under the new framework.
Illinois officials have not publicly responded to the lawsuit, and the tax remains scheduled to begin in January 2027.
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