Illinois officials and crypto industry groups are asking a court to delay a transaction tax that could charge investors even when their holdings have lost value.
Their October 1 joint motion asks the Sangamon County Circuit Court to move the scheduled start from January 1 to July 1, 2027. The Digital Chamber, Illinois Blockchain Association and state officials have agreed to seek the postponement, but the published request still needs court approval.
The proposed six-month pause would allow the legal challenge to proceed before collection begins. Businesses are already preparing: in a separate case, the Crypto Council for Innovation and Blockchain Association said on September 9 that firms were spending millions on compliance systems.
A loss would not cancel the transaction charge
For customers, the unusual feature is the calculation. The Digital Asset Tax Act sets a 0.2% levy on the value of assets involved in covered activity, which brokers would collect from customers. Whether those assets have risen or fallen since purchase would not determine this charge.
Consider a hypothetical $12,000 investment that falls to $10,000. If the owner then uses a qualifying broker service involving that holding, the transaction tax would be $20. The investment has lost $2,000 in value, yet the service still generates a bill.
That example covers one taxable event, without calculating the owner’s wider tax position. Further qualifying activity could add costs while the investment remained below its purchase price. Two people holding similar portfolios could therefore face different charges depending on the services they use.
Coindoo’s earlier coverage of federal proposals for small crypto fee relief explains gain-or-loss calculations on crypto used to pay fees. Illinois’s levy concerns an additional cost measured against the assets involved in a broker service.
Who receives the fee matters
The Department of Revenue’s September 28 draft rules tie the levy to an Illinois customer paying a qualifying broker for covered activity recorded on a blockchain. Paid transfers between the customer’s own accounts can qualify, so keeping ownership does not by itself prevent taxation.
However, a network gas fee alone would not satisfy the draft’s definition of payment to a broker. Someone withdrawing crypto to a personal wallet would need to distinguish gas paid to process the transfer from a broker’s charge for arranging it. That difference is why describing every wallet transfer as taxable would be misleading.
The department is accepting comments through October 30, and its official notice confirms that these remain draft rules. Their wording could change, although administrative clarification would not settle the plaintiffs’ broader objection to the tax itself.
In its July 21 lawsuit announcement, the Digital Chamber argued that comparable financial activity should not receive different tax treatment because it uses blockchain. The claims invoke the Illinois and US constitutions and the federal Internet Tax Freedom Act; state officials dispute them.
The joint motion preserves those competing arguments, leaving the court to decide the law’s validity. An entered injunction would establish whether the requested July deadline takes effect, while the wider case or legislative changes could alter the levy’s future.
For users, the practical consequence would be a cost attached to qualifying account activity even when there is no investment profit. Understanding a broker’s services and charges could become part of assessing what it costs to hold and move crypto.
This article is for informational purposes only and does not constitute legal, tax or investment advice. The requested delay requires court approval, and the draft tax rules may change.
Krasimir Rusev is a journalist and digital content creator with over 4 years of experience and more than 1,000 published pieces in the financial space. His work focuses on stock markets and commodities, closely tracking asset movements and the factors that drive them.
He has a particular interest in gold and oil markets – not just their current movements, but their history, structure, and long-term trends. For him, understanding the context behind prices matters just as much as the prices themselves.
A self-described Bitcoin maximalist, Krasimir has been following crypto markets long before he became a journalist. What started as a casual interest in Bitcoin gradually turned into a deep conviction – one that shaped how he thinks about money, value, and the broader financial system. That perspective quietly informs everything he writes.
Beyond writing analysis and news, he actively creates content for social media including TikTok, Facebook, and Instagram, presenting market topics in a more accessible and visually engaging format. He believes financial information should reach a wide audience – not just those already following the markets.
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