US Justice Department, business groups and DeFi firms challenge Illinois crypto tax
Industry groups argued in court filings that Illinois’ crypto tax, which applies even when a transaction yields no profit, could raise compliance costs and violate federal law.
Several industry groups, including the US Justice Department, business organizations, and decentralized finance firms, have challenged Illinois' new crypto tax. The tax applies to digital asset transactions regardless of profit, raising concerns about compliance costs and potential constitutional violations. Over the past week, the DOJ filed a statement of interest, while the US Chamber of Commerce and SIFMA submitted an amicus filing.
The coalition of DeFi firms also filed a brief, according to a recent announcement from the Blockchain Association and Crypto Council for Innovation. The tax, originally planned to start on January 1, 2027, was delayed to July 1, 2027, allowing more time for legal challenges. Illinois projected the tax would generate $60 million in fiscal year 2027 revenue.
The tax has been criticized for imposing equal taxation on those who lose money and those who make a profit, and for potentially exposing banks, brokers, and asset managers to substantial compliance costs. The groups argue the tax discriminates against digital asset services and could violate federal tax and interstate commerce laws.
The DOJ and the DeFi coalition also expressed concerns about the tax's potential impact on innovation and the difficulty in determining which entities are responsible for collecting the tax.
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