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Illinois Crypto Tax Draws Unlikely Alliance of DOJ, Banks and DeFi
A broad coalition including the US Justice Department, financial industry groups and crypto firms is backing a legal challenge to Illinois’ Digital Asset Tax Act. They argue the tax is discriminatory and could harm digital asset businesses and US policy on the sector.
The law applies a 0.2% levy to the full value of a digital asset when an Illinois customer trades, transfers or stores it through a broker, even without a sale or gain. The challengers say its definitions could also affect banks, advisers, software developers and decentralised protocols; an estimated 2.64 million Illinois residents hold digital assets. Illinois has paused enforcement until 1 July 2027 while the court case proceeds.
In short
- A coalition is challenging Illinois’ digital asset tax.
- The 0.2% levy can apply without a sale or gain.
- Enforcement is paused until July 2027 during the court case.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Supporters of the tax can argue that digital asset activity should contribute to public revenue under rules that apply consistently to transactions involving other forms of property and financial services. A levy could help fund public services and ensure that crypto businesses do not gain a tax advantage simply because their products use new technology.
The case against
Opponents can argue that taxing an asset’s full value whenever it is traded, transferred or stored—without a sale or gain—could impose repeated costs unrelated to a customer’s profit. They also contend that broad definitions may burden banks, advisers, software developers and decentralised protocols, discourage businesses from operating in Illinois, and undermine consistent national policy for digital assets.