The U.S. Department of Justice, the U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association (SIFMA), and the DeFi Alliance filed documents with the court opposing the digital asset tax passed by the State of Illinois in June of this year. The tax imposes a 0.2% levy on the exchange, transfer, or storage of digital assets, regardless of whether the transaction results in a profit. The plaintiffs point out that the tax applies equally to transactions resulting in losses, and that tax is due even when assets are merely transferred between accounts without any buying or selling taking place. Banks, brokers, custodians, and other entities will incur costs to develop systems to identify Illinois customers and assess taxable transactions, and they face the risk of criminal penalties for noncompliance.
The plaintiffs argue that the tax discriminates against digital assets, as transactions involving traditional assets are not subject to the same tax treatment, which may violate federal constitutional requirements. The Department of Justice states that this tax policy conflicts with federal policies promoting crypto innovation. The DeFi Alliance points out that the tax mechanism may require software developers and blockchain participants—who lack access to customer information or control over funds—to be responsible for collecting the tax. The tax, whose implementation has been postponed from the originally scheduled January 2027 to July 1, is expected to generate $60 million in annual revenue.
Cover image: Asher Heimermann / Wikimedia Commons (CC BY 3.0)