The Crypto Council for Innovation and Blockchain Association are seeking a preliminary injunction to stop Illinois’ new cryptocurrency tax from taking effect while their legal challenge proceeds.
The industry groups filed the request Wednesday in Sangamon County Circuit Court, just weeks after suing to overturn the tax. They argue that delaying implementation is necessary to prevent further harm to businesses affected by the law.
The organizations, along with The Digital Chamber, previously challenged Illinois’ Digital Asset Tax Law, arguing that federal law prevents the state from imposing the levy. Passed during the final day of Illinois’ legislative session, the law establishes a 0.2% tax on qualifying digital asset-related gross receipts for businesses based in Illinois or providing services there. It applies to entities generating more than $100,000 in gross receipts and is scheduled to take effect Jan. 1, 2027.
In Wednesday’s filing, the groups said their member companies are already incurring substantial expenses as they develop systems and processes needed to comply with the upcoming tax. They characterized the potential damage as “serious and irreparable harm.”
CCI CEO Ji Hun Kim said companies could be forced to spend millions of dollars preparing for a tax that the organization believes violates constitutional protections. He also questioned the lack of clarity over which activities will be taxed and when the tax would apply.
Blockchain Association CEO Summer Mersinger argued that postponing the law would cause little financial harm to Illinois. She noted that the state would not be able to use the revenue it expects to collect while the legal dispute remains unresolved, while businesses could face significant costs if compliance efforts continue.
The latest motion also reinforces the industry’s argument that the Internet Tax Freedom Act and the U.S. Constitution preempt Illinois’ tax on digital asset transactions.
The groups further claim that the legislation treats digital assets differently from traditional financial services. They pointed out that Illinois generally does not impose sales taxes on transactions involving financial assets, instead taxing income and capital gains connected to those activities. The state’s sales and use tax framework also largely excludes intangible personal property and specifically exempts money and precious metals.
The outcome could have implications for other states considering similar measures. Mersinger warned that if Illinois succeeds in defending the law, other jurisdictions could be encouraged to introduce their own taxes on digital asset activity.
The preliminary-injunction request now puts the Illinois tax on hold as a key legal battle over state taxation of crypto moves through the courts.
