DOJ and Crypto Firms Back Lawsuit Against Illinois Crypto Tax

The US Department of Justice, the US Chamber of Commerce and the industry group SIFMA have backed a court challenge to Illinois' tax on digital assets. A coalition of crypto firms led by the DeFi Education Fund, Andreessen Horowitz, Paradigm and Uniswap joined them. The law sets a 0.2% tax on the value of an asset even when the transaction produced no profit.

What happened

In the week up to November 12, several filings in support of the lawsuit reached the Illinois state court. The plaintiffs ask the court to strike down the Digital Asset Tax Act and permanently bar its enforcement. The Justice Department filed a statement of interest on November 6, and the crypto coalition submitted a separate brief on November 11.

The law was enacted in June. It was first due to take effect on January 1, 2027, but in October Illinois agreed to push the start to July 1, 2027. The delay gives the court time to hear the case.

The first suits came earlier. In July the Digital Chamber sued Illinois Attorney General Kwame Raoul and state revenue official David Harris. In August the Blockchain Association and the Crypto Council for Innovation filed a separate challenge.

Who backed the lawsuit

In its November 6 statement the Justice Department called the tax vague and discriminatory because it singles out crypto among all other assets. In the department's view, that approach undermines federal policy and US leadership in digital assets. As examples of that policy it cited the Strategic Bitcoin Reserve and the GENIUS Act, which set federal rules for stablecoins.

The US Chamber of Commerce and SIFMA, which represents hundreds of broker-dealers, banks and asset managers, filed an amicus brief. They say the tax reaches beyond crypto platforms to traditional banks, custodians and advisers that offer digital assets to clients.

A separate November 11 filing was signed by the DeFi Education Fund, Andreessen Horowitz, Paradigm and Uniswap. Aave Labs, Chainlink Labs, Solana Policy Institute, Phantom, Jito Labs, Multicoin Capital and Stand With Crypto joined them.

What the objections rest on

The law requires brokers to collect 0.2% of the full value of a digital asset each time an Illinois customer trades, transfers or stores it. The tax needs no sale, no profit and no change of owner. Illinois does not tax dollars, gold or stocks this way, and no other state has a similar tax.

SIFMA and the Chamber pointed out that moving the same asset between two accounts can be taxed on both ends without a single sale. Firms would have to build systems that identify Illinois customers, value assets and pick out the taxable transactions. Violations carry criminal penalties.

The filings repeat four arguments.

• The tax applies whether the customer won or lost.
• Similar transactions in traditional assets go untaxed.
• The law may violate federal protections for internet commerce and constitutional rules on interstate trade.
• Obligations could fall on developers who hold neither customer data nor access to customer funds.

The crypto coalition separately pointed to loose wording. It could reach software developers and decentralized protocols that do not hold customer funds and cannot tell where a transaction took place. According to the filing, about 2.64 million residents of the state hold digital assets, the fifth-highest number in the country.

"This tax is unclear, discriminatory, unconstitutional, and harmful to the future of finance."

- Ji Hun Kim, CEO of the Crypto Council for Innovation, and Ashok Pinto of the Blockchain Association, from a joint statement of November 12, 2026

What is known about the next steps

Illinois expected $60 million in revenue from the tax in fiscal 2027, according to the governor's budget office. House Speaker Emanuel "Chris" Welch earlier presented the law as part of an affordability agenda meant to "close corporate loopholes" and make big tech companies and crypto billionaires "pay their fair share", the Chicago Tribune wrote.

The lawmakers behind the law and the governor's office did not respond to Cointelegraph's requests before publication. The sources name no date for a ruling, and the tax is not collected before July 1, 2027.