The Digital Chamber has launched a legal challenge against Illinois’ new Digital Asset Tax Act, arguing that the law unfairly singles out cryptocurrency transactions and violates constitutional protections by treating blockchain users differently from participants in traditional financial markets.
The lawsuit marks the first major court challenge to a state law imposing a dedicated tax on digital asset transactions.
Industry Seeks to Block Illinois Crypto Tax
Illinois’ Digital Asset Tax Act is set to take effect on January 1, 2027. Under the legislation, a 0.02% tax would be applied to the full value of every digital asset transfer.
The measure targets crypto exchanges, wallet providers, and custodians operating in Illinois or generating more than $100,000 in annual revenue from customers in the state.
As the first state level tax of its kind in the United States, the law has drawn sharp criticism from the crypto industry. Opponents argue that the tax could be imposed multiple times throughout the lifecycle of a single transaction, increasing costs and discouraging blockchain activity within Illinois.
Andreessen Horowitz crypto executive Miles Jennings previously described the legislation as one of the most hostile crypto laws introduced in the United States.
The Digital Chamber is asking the court to prevent the law from taking effect, arguing that digital asset users should not face tax rules that differ from those applied to traditional financial transactions.
The organization also claims the tax provision was added to the state budget the night before the final legislative vote, leaving lawmakers with little opportunity for public debate or committee review.
In addition to blocking enforcement, the group is asking the court to declare the law unconstitutional under both state and federal law and to require Illinois to cover its legal fees and court costs.
Lawsuit Claims Unequal Treatment
According to the complaint, the legislation taxes digital asset transfers regardless of whether they generate a profit or a loss.
The Digital Chamber argues that the law bases its tax treatment on the technology used to record ownership rather than the economic outcome of the transaction. As a result, transfers recorded on blockchain networks are treated differently from comparable transactions conducted through traditional financial systems.
The organization maintains that this unequal treatment violates fundamental constitutional principles and argues that taxpayers should not face different rules simply because they use blockchain technology.
Digital Chamber Chief Executive Officer Cody Carbone said tax policy should be designed to ensure fairness for all participants and explained that the lawsuit seeks to protect both consumers and businesses operating in the digital asset sector.
While Illinois is moving forward with a dedicated crypto transaction tax, several other US states have adopted a more supportive stance toward digital assets. Texas has approved legislation allowing Bitcoin to be held in state reserves, while Florida has banned the use of central bank digital currencies and eased regulations for noncustodial crypto service providers.#crypto#cryptonews https://coinsignals.net https://t.me/coinsignalpublic
