The Digital Chamber, a blockchain trade group, filed a lawsuit this week to block Illinois' Digital Asset Tax Act, a first-in-the-nation levy that would impose a 0.02% tax on every crypto transfer. The law, set to take effect Jan. 1, 2027, would apply to exchanges, wallet providers, and custodians based in Illinois or earning more than $100,000 in the state. TDC argues the tax is unconstitutional and discriminates against blockchain transactions.
A tax on every move
Illinois' Digital Asset Tax Act, or DATA, imposes a 0.02% levy on the full value of a digital asset each time it's transferred. That means a single transaction — say, moving Bitcoin from an exchange to a wallet — could trigger the tax at multiple points if intermediaries are involved. Critics say the structure would pile costs on users and drive crypto activity out of the state. Andreessen Horowitz crypto executive Miles Jennings called it one of the most 'anti-crypto laws' in the United States.
Rushed through, TDC says
The lawsuit claims the tax clause was added to the legislation the night before its final consideration, leaving no room for a proper hearing. TDC wants the court to stop enforcement, rule the tax violates both the state and federal constitutions, and award legal fees. The group is seeking a preliminary injunction to halt the law before it takes effect.
What the lawsuit argues
TDC contends the tax unlawfully targets blockchain transactions for discriminatory reasons. The lawsuit notes the levy doesn't distinguish between profitable and loss-making transactions — it treats them differently based solely on the technology used to record ownership. That, TDC argues, violates equal protection and interstate commerce clauses. The tax also applies regardless of whether the asset is moved for trading, storage, or payment.
Illinois goes left as Texas, Florida go right
Other states are moving in the opposite direction. Texas now allows Bitcoin in state reserves. Florida banned central bank digital currencies and eased rules for non-custodial operators. Illinois' approach stands out as the first tax of its kind in the U.S., and the lawsuit could set a precedent for how states treat digital assets. The court will now weigh TDC's motion for a preliminary injunction, with the Jan. 1 deadline looming.
