The Digital Chamber sues Illinois over incoming crypto transaction tax

Crypto trade association The Digital Chamber is taking Illinois to court over its decision to pass a law imposing a 0.2% tax on digital asset transactions, a move that has become highly controversial in crypto circles.

On Tuesday, the organization filed a complaint in a circuit court in Illinois accusing the state of singling out digital assets in that they are being taxed differently because of the technology.

"Today we are asking the courts to protect consumers and our members and stop this unfair tax in Illinois," said TDC CEO Cody Carbone in a statement. "Taxes should be carefully considered, not only for the revenue they produce but for the fairness of those being taxed. That was not the case here as the provision slipped into legislation the night before the bill’s final consideration."

The Digital Asset Tax Act was signed into law by Governor JB Pritzker as part of the state's FY2027 budget planning last month. The tax is scheduled to take effect in January 2027. The crypto industry has been quick to criticize the measure, with some calling it the "most punitive digital asset tax in the country." Industry groups have also raised questions about how the law will be implemented in practice.

TDC has more than 250 members globally, including Anchorage Digital, Chainlink Labs and ICE, owner of the New York Stock Exchange.

In the 32-page complaint, TDC said it is not looking for special treatment, but wants the "equal treatment of economically identical property regardless of the technology through which ownership is recorded, transferred, or settled."

Illinois' tax could also float over to other states and affect other areas, TDC said.

"If Illinois may impose a special transaction tax because commerce occurs through blockchain infrastructure, other States could impose similar taxes on commerce conducted through artificial intelligence-enabled settlement systems, cloud-based payment networks, or any future form of electronic commerce, while leaving economically identical transactions conducted through older technologies untaxed,"  TDC said in its complaint.

TDC is asking the court to declare the new Illinois law "void and unenforceable" because it violates the U.S. Constitution and to grant relief.

At the federal level, Commodity Futures Trading Commission Michael Selig has lambasted Illinois over its new tax, adding that lawmakers there have "slammed the brakes on technological progress."