Federal officials and groups challenge Illinois digital asset tax

The U.S. Department of Justice, business groups and cryptocurrency organizations have joined legal challenges seeking to block Illinois’s 0.2% tax on specified digital-asset activity, arguing that it can apply even when a transaction generates no profit. The tax is scheduled to take effect July 1, 2027, after Illinois delayed its original January 1 start date while court challenges proceed.

The law, enacted in June, imposes a tax on the value of digital assets exchanged, transferred or stored. Its application regardless of profit is central to the challengers’ objections. The filings support lawsuits brought against Illinois officials by the Digital Chamber and, separately, by the Blockchain Association and the Crypto Council for Innovation.

On November 6, the Justice Department filed a statement of interest arguing that the tax conflicts with federal efforts to support digital-asset innovation. The department cited federal initiatives including the Strategic Bitcoin Reserve and the GENIUS Act, which established rules for stablecoins. Its filing represents the federal government’s position in the dispute; it does not resolve whether the state law is lawful.