Crypto groups push for preliminary injunction
Crypto lobbying groups are asking an Illinois state court to stop a new tax on digital asset transactions before it takes effect. The Crypto Council for Innovation and the Blockchain Association filed a motion on Wednesday in Sangamon County Circuit Court. They want a preliminary injunction against the Digital Asset Tax Law. The two groups first sued last month and were joined by The Digital Chamber.
What the Illinois tax would do
At issue is a 0.2% tax passed on the final day of Illinois’ legislative session earlier this year. It would apply to entities based in Illinois or those providing services in the state with gross receipts over $100,000. The tax is scheduled to start on Jan. 1, 2027.
The filing argues that member companies are already facing serious and irreparable harm. They say businesses must spend money now to build systems for a tax that may never be legal. CCI CEO Ji Hun Kim said companies are being asked to spend millions on compliance for a tax that violates their constitutional rights. He also said basic questions remain about what is taxed and when. Blockchain Association CEO Summer Mersinger said Illinois would not be able to use any projected funds while the case is ongoing. She argued the state loses little by waiting, while everyone else loses a great deal if the tax moves forward.
Preemption arguments and next steps
Much of the motion repeats arguments the crypto industry has made before. The groups claim the Internet Tax Freedom Act and the U.S. Constitution preempt Illinois’ tax on digital asset transactions. They also say the state would treat digital assets differently from other financial services. Illinois generally does not tax transactions or services involving financial assets, the filing notes, beyond income, capital gains, and sales where financial assets are used as payment. The state’s sales and use taxes do not reach most intangible personal property, and they expressly exempt money and precious metals.
Mersinger suggested other states could follow Illinois if it wins. She said Illinois will not be the last state to try this if the law stands. The court has not yet ruled on the request. For now, the case continues as the industry tries to kill the tax through the legal system.
