The Crypto Council for Innovation (CCI) and the Blockchain Association (BA) have filed a lawsuit against Illinois authorities over the introduction of a 0.2% tax on cryptocurrency in the state. The tax is planned to be levied starting in January 2027.
In the lawsuit, filed on Friday in the Sangamon County District Court, which is part of the Seventh Judicial District, lawyers for the two cryptocurrency advocacy organizations challenged Illinois' digital assets tax. They argue that it violates the U.S. Constitution, the state constitution, federal and state due process laws, and the federal Internet Tax Freedom Act. In June, Illinois Governor J.B. Pritzker signed a law introducing this "privilege tax" as part of the state's budget for the 2027 fiscal year. The law mandates that cryptocurrency users be taxed based on transaction volume, not income.
In the claim alleging a violation of due process rights, CCI and BA stated that the tax is "unconstitutionally vague," as it requires residents and brokers, "under threat of serious civil and criminal penalties," to determine which assets and in what manner are subject to the tax. The organizations also cited the U.S. Constitution and claimed an alleged violation of the Commerce Clause: according to them, the state tax "creates a risk of double taxation."
"States have an important role in fostering innovation, but these powers have constitutional limits," said Blockchain Association CEO and former U.S. Commodity Futures Trading Commission Commissioner Summer Mersinger. "Illinois cannot create a new tax regime that discriminates against digital commerce, creates uncertainty for consumers and businesses, and threatens to fragment a rapidly growing nationwide market."
Source: Blockchain Association
The CCI and BA lawsuit follows a similar one filed by The Digital Chamber in July. The organization stated that the Illinois tax "discriminates against people transacting in digital assets." The lawsuits demonstrate the influence of groups representing digital assets interests opposing laws passed by U.S. state authorities in an election year. Cryptocurrency policies, laws, and regulations can influence voters.
Related: Nigeria Establishes Rules for Collecting Taxes from Crypto Platforms for Digital Assets
Illinois Also Targets Prediction Markets
Opposition to the cryptocurrency tax began against the backdrop of a lawsuit by prediction markets platform Kalshi against Illinois authorities over a law that took effect on July 1. According to the company, the legislation "directly prohibits contracts on sporting events," violating federal law by requiring state-level licensing.
Separately, Pritzker signed an order banning state employees from placing bets on these platforms. The order was signed in April to "prevent insider trading amid the rise of online prediction markets and gambling contracts related to events."
Magazine: Crypto Industry Ties Became a Burden in Illinois Primaries
