Crypto09 September, 20263 min read
Crypto Council for Innovation and Blockchain Association Seek Injunction Blocking Illinois 0.2% Crypto Tax
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Crypto groups seek a preliminary injunction blocking Illinois’ 0.2% crypto tax. They argue the tax is unconstitutional and imposes costly compliance burdens.
Illinois crypto tax fight
Crypto industry groups including the Crypto Council for Innovation and the Blockchain Association have asked a judge to block Illinois from enforcing its Digital Asset Tax Act before it takes effect in January 2027.
PYMNTS reported that Anchorage Digital backed a lawsuit aimed at blocking the Illinois law that will tax crypto when it is exchanged, transferred or held in storage, and said the law taxes people 0.2% of the value of their crypto.
The Digital Asset Tax Act is set to take effect Jan. 1, 2027, according to PYMNTS, and the groups’ motion seeks to bar enforcement while the underlying legal dispute continues.
In a filing described by Cointelegraph, Ji Hun Kim, CCI CEO, said, "Companies are being asked to spend millions to build systems for a tax that violates their constitutional rights".
Cointelegraph also said the motion was filed in the Circuit Court of Sangamon County, Illinois, as the groups argued the tax would impose costly compliance burdens and criminal-penalty threats.
Court filing and arguments
The Block reported that the Blockchain Association and the Crypto Council for Innovation filed a motion for a preliminary injunction in a Circuit Court in Sangamon County, Illinois, to stop Illinois from enforcing its new tax legislation before it takes effect in January. The Block said the groups’ 34-page motion argued the new tax would be unprecedented and that it is causing "irreparable harm" to its members. In that same motion, The Block quoted the groups saying, "Plaintiffs—two leading digital-asset trade associations—and their members are left to spend millions to try to comply with the Act".
Cointelegraph said the groups argued the law violates the US Constitution, the state’s constitution, federal and state due process laws, and the federal Internet Tax Freedom Act. Cointelegraph also reported that Illinois Governor JB Pritzker signed the measure as a "privilege tax" in June, requiring crypto users to be taxed based on transaction volume rather than income.
What’s at stake next
The trade groups’ push to halt enforcement is framed as a race against the Jan. 1, 2027 deadline, with Cointelegraph saying the clock is forcing companies to act without answers to basic questions about what is taxed and when.
“The state loses very little by waiting. Everyone else loses a great deal by forging ahead.”
PYMNTS reported that the lawsuit targets the Digital Asset Tax Act, and said the law includes felony charges for companies that don’t comply, is unclear about when the tax applies, and is estimated to require compliance infrastructure costing between several hundred thousand dollars and over $1 million.
Cointelegraph quoted Summer Mersinger, CEO of the Blockchain Association, saying, "The state loses very little by waiting. Everyone else loses a great deal by forging ahead."
PYMNTS also reported that Illinois Gov. JB Pritzker signed the bill into law in June and that the tax was added to the state’s broader budget bill at the last minute.
Separately, Cointelegraph said Illinois is also targeting prediction markets, noting that Kalshi filed a lawsuit over a law that went into effect on July 1 that "expressly bans sports event contracts," which Kalshi said violates federal law by requiring state licensing.