The fight against Illinois’ first-of-its-kind Digital Asset Tax Act has drawn an unusually broad coalition spanning the U.S. Justice Department, Wall Street’s largest lobbying groups, and major crypto and DeFi organizations. The law imposes a 0.2% levy on the full value of a digital asset each time an Illinois customer trades, transfers, or stores it through a broker, even when there is no sale, gain, or change in ownership.
On Nov. 6, the Justice Department filed a statement of interest arguing the tax undermines federal policy and U.S. leadership in digital assets, calling it vague and discriminatory because it singles out crypto for treatment no other asset faces. The U.S. Chamber of Commerce and SIFMA filed an amicus brief warning that the tax reaches beyond crypto-native platforms to traditional banks, custodians, and advisers increasingly offering digital asset products.
On Nov. 11, the DeFi Education Fund announced it had joined Andreessen Horowitz, Paradigm, and Uniswap Labs in filing an amicus brief supporting the lawsuit brought in Sangamon County circuit court by The Digital Chamber, the Blockchain Association, and the Crypto Council for Innovation. The filing included 14 co-signers such as Aave Labs, Aptos Labs, Chainlink Labs, Multicoin Capital, Phantom, the Solana Policy Institute, Jito Labs, and Stand With Crypto.
The coalition’s core argument is that the law’s definitions are so vague they could stretch to software developers and decentralized protocols that hold no customer funds and cannot identify users or know where transactions occurred. A broker is liable for the tax whether or not it collected it, and customers are presumed to be in Illinois based on mailing or IP address records. For non-custodial front-ends, wallet software, and immutable protocols, there is often no operator able to add a collection step or verify a user’s location.
Illinois’ September 28 draft rules provided partial relief: swap fees paid entirely to liquidity providers and network fees paid to validators do not count as consideration that triggers the tax, while protocol fees retained by platform operators do. However, the draft also requires account records showing asset movements to include private keys, which critics say would force businesses to store credentials that could spend user funds. The coalition also objected to treating withdrawals to a user’s own wallet and cross-chain bridging as taxable transfers.
Governor JB Pritzker signed the Act in June as part of the state’s fiscal 2027 budget, with a start date of January 1, 2027. The state has since agreed to push effectiveness and enforcement to July 1, 2027, pending court approval. The briefs argue the tax violates the uniformity clause of the Illinois Constitution and the federal Internet Tax Freedom Act. They also note an estimated 2.64 million Illinois residents hold digital assets, the fifth-highest total of any state.
“This tax is unclear, discriminatory, unconstitutional, and harmful to the future of finance,” CCI CEO Ji Hun Kim and Blockchain Association executive Ashok Pinto said in a joint statement.
