Cryptocurrency Industry Organizations Push for Injunction Against Illinois Digital Asset Tax Set for January Launch
Building upon their previous legal challenge, the Crypto Council for Innovation and Blockchain Association are fighting to halt Illinois' proposed 0.2% cryptocurrency tax, claiming constitutional violations and burdensome compliance costs.
Two prominent industry advocacy organizations, the Crypto Council for Innovation (CCI) and the Blockchain Association (BA), are working to prevent Illinois from implementing a 0.2% levy on digital currency transactions scheduled to become effective in January 2027.
In an announcement made on Wednesday, the industry advocacy organizations disclosed that they have submitted a request for preliminary injunction with the Circuit Court of Sangamon County, Illinois, aimed at shielding digital asset businesses from experiencing permanent damage.
Companies are being asked to spend millions to build systems for a tax that violates their constitutional rights without answers to basic questions about what is taxed and when, all under the threat of criminal penalties. These costs are being borne right now, against a Jan. 1 deadline, forcing companies to divert key resources and employees to a clearly unlawful tax.
Ji Hun Kim, CCI CEO
In the previous month, the pair of organizations initiated legal proceedings contesting Illinois' digital asset taxation measure, asserting that it infringes upon the US Constitution, the constitution of Illinois, federal and state due process regulations, and the federal Internet Tax Freedom Act.
The legislation was enacted into law by Illinois Governor JB Pritzker in June as a "privilege tax" as a component of the state's fiscal year 2027 budget proposal, mandating that cryptocurrency users face taxation based on transaction volume instead of income. An additional industry organization, the Digital Chamber, submitted a comparable lawsuit several days prior.
The state located in the Midwest became the first across the nation to specifically target cryptocurrency transactions with such a tax.
The state loses very little by waiting. Everyone else loses a great deal by forging ahead. And if this Act stands, Illinois will not be the last state to try it.
Summer Mersinger, CEO of the Blockchain Association
In a different but related matter, Illinois has also set its sights on prediction markets. The trading platform Kalshi's has initiated litigation against Illinois state officials concerning legislation that became enforceable on July 1 that "expressly bans sports event contracts," which the platform maintains violates federal law by mandating state licensing.
In another separate action, Governor Pritzker issued an executive order in April prohibiting state employees from placing wagers on the platforms in a move designed to "prevent insider trading amid the rapid growth of online prediction markets and event-based gambling contracts."