The state of Illinois is facing a second lawsuit from the crypto industry over its new tax rules. The Blockchain Association and the Crypto Council for Innovation (CCI) officially filed a lawsuit in the Seventh Judicial Circuit Court in Sangamon County on August 21, 2026. The primary goal is to block Illinois Public Act 104-468, a 0.2% digital asset tax regulation scheduled to take effect on January 1, 2027.
This tax rule has sparked protests due to its design, which differs from typical taxes. The 0.2% rate is levied on the total value of transacted digital assets rather than being taken from gains or transaction fees. This means that crypto holders who simply transfer assets between their own wallets risk having a tax deducted.
The Illinois government estimates this scheme could generate approximately $60 million in annual revenue. According to the schedule, brokers must register and start collecting the tax by next January 1, with the first tax payments due in February 2027. This legal move follows a similar step by the Digital Chamber, which had already filed a lawsuit against the same regulation on July 21, 2026.
Allegations of Federal Law Violations
In their lawsuit, the associations accuse the state government of violating the federal Internet Tax Freedom Act. The core of their objection lies in the unequal treatment of digital assets compared to conventional asset instruments like stocks, gold, or cash.
CCI CEO Ji Hun Kim emphasized that this policy is intentionally designed to suppress crypto operations. “This tax targets digital assets with a highly punitive treatment,” Kim explained. The lawsuit also carries a series of allegations regarding potential violations of the dormant Commerce Clause, federal and Illinois due process rules, and the state’s Uniformity Clause.
Three Scenarios Leading Up to 2027
There are now three remaining scenarios that will determine the fate of the Illinois crypto tax before the year-end deadline. The first scenario relies heavily on a state court ruling to issue an injunction before the regulation goes into effect.
The second scenario relies on the legislative route through House Bill 5798. The bill to repeal the tax, proposed by Representative John Cabello on June 22, remains stalled and has not yet reached the committee stage. If both paths fail, the third scenario is full implementation. For brokers and digital asset owners in Illinois, the remaining four months serve as the final window before they are required to record every coin movement to comply with government demands. Reported by crypto.news.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
