Andreessen Horowitz, DeFi Education Fund push back against Illinois crypto tax

Crypto industry heavyweights are banding together to challenge Illinois over its controversial crypto tax, with the DeFi Education Fund and Andreessen Horowitz among those joining the fight.

On Thursday, the group filed an amicus brief backing the crypto industry's challenge to the Digital Asset Tax Act in Illinois, arguing that the law is overly broad and unfairly targets the digital asset industry.

"The Act singles out transactions involving blockchain technology for unfavorable tax treatment and affects a substantial number of Illinois residents: an estimated 2.64 million Illinoisans hold digital assets, the fifth-highest total of any state," they said in the brief.

The DeFi Education Fund, Paradigm, Uniswap and Andreessen Horowitz led the entities that signed the letter, which include  Aave Labs, Aptos Labs, Aztec Labs, Chainlink Labs, the Decentralization Research Center, Dromos Labs, Figment Inc., Hyperliquid Policy Center, Jito Labs, Multicoin Capital Management LLC, Orca Creative, Phantom Technologies, Solana Policy Institute and Stand With Crypto. 

The filing adds to a growing legal battle over the legislation. The Blockchain Association, the Crypto Council for Innovation and The Digital Chamber have sued Illinois after its governor, JB Pritzker, signed into law the Digital Asset Tax Act as part of the state's fiscal year 2027 budget planning. The law imposes a 0.2% tax on digital asset transactions and was initially scheduled to go into effect in January 2027, but has since been postponed to July 2027. 

The law has drawn swift criticism from crypto industry advocates, who have described it as unprecedented and sought to block its implementation. In the amicus brief on Thursday, the group said the law does not take into account the "technological complexities" that come with digital assets. 

"The Act fails to establish sufficiently clear boundaries between taxable digital asset business activity and the provision of software and network infrastructure that enables users to transact independently," they said.