Crypto lobby group TDC sues Illinois to block digital asset tax

Illinois enacted a 0.2% tax on all crypto transactions last month, with the tax taking effect next year.

By Nikhilesh De|Edited by Jesse HamiltonUpdated Jul 21, 2026, 10:31 p.m. Published Jul 21, 2026, 10:08 p.m. 2 min readMake preferred on Share this articleMake preferred on

Summary

• The Digital Chamber filed a lawsuit seeking to block Illinois' Digital Asset Tax Act from taking effect.
• The tax applies to any firm based in or operating in Illinois, which provides digital asset services in the state.

A crypto lobbying organization has sued the state of Illinois over a last-minute tax provision inserted into the state budget last month.

The Digital Chamber alleged that Illinois' Digital Asset Tax Act violated both the U.S. and state constitutions and is preempted by a federal tax law. The lawsuit, filed Tuesday, asks a federal judge to block the Illinois state government from enforcing the tax.

The tax violates the Illinois state constitution's uniformity and due process clauses, the Commerce Clause of the U.S. Constitution and the Internet Tax Freedom Act by specifying digital asset transactions, the suit said.

The Digital Asset Tax Act was passed and approved on short notice last month, right before the Illinois state government wrapped up its session for the year. The 0.2% tax applies to any entities that are based in Illinois or provide services with gross receipts of over $100,000. The tax takes effect in January.

TDC's lawsuit said the Internet Tax Freedom Act alone created a rule that "electronic commerce would not be subjected to discriminatory state and local taxation."

"The Act does not distinguish between gains and losses, between profitable and unprofitable transactions, between realized and unrealized appreciation, or between transfers that change ownership and transfers that do not,” the filing said. “It distinguishes only between traditional financial infrastructure and blockchain infrastructure.”

Federal law makes a distinction between what an asset represents "from the infrastructure used to record them," the filing said, adding that no other body of law makes a distinction tied to what technology records ownership.

The lawsuit, brought on behalf of TDC's members, asks a state judge to rule that the crypto tax violates state and federal constitutions and also to block the state of Illinois from enacting the law and award any fees and costs to TDC.

TaxLatest Crypto News Latest Research

TRON Network - Q2 2026

TRON Network - Q2 2026

In Q2; TRON's stablecoin dominance rose to 28.7%, USDT supply on TRON hit $89B ATH, $89M in protocol fees (2nd to Hyperliquid), TRX +3%, and deepening institutional & agentic reach.

By CoinDesk Research9 hours agoCommissioned byTron

In Q2; TRON's stablecoin dominance rose to 28.7%, USDT supply on TRON hit $89B ATH, $89M in protocol fees (2nd to Hyperliquid), TRX +3%, and deepening institutional & agentic reach.

Why it matters:

In Q2; TRON's stablecoin dominance rose to 28.7%, USDT supply on TRON hit $89B ATH, $89M in protocol fees (2nd to Hyperliquid), TRX +3%, and deepening institutional & agentic reach.

View Full ReportMore From Policy

Crypto Clarity Act still at mercy of ethics section as Democrats balk at Trump deal

White House pushes Senate Democrats to take 'historic' crypto Clarity Act ethics deal

Movement Labs files for Chapter 11 bankruptcy months after token scandal