U.S. Department of Justice and Crypto Firms Support Overturning Illinois Digital Asset Tax

According to TechFlow, on November 13, Decrypt reported that the U.S. Department of Justice, the U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association (SIFMA), and multiple cryptocurrency organizations filed legal briefs supporting a lawsuit to overturn Illinois’s digital asset tax.

The state tax law imposes a 0.2% levy on the full value of digital assets traded, transferred, or held in custody by clients through brokers, even when no sale or realized gain occurs. The Department of Justice argues that the tax is discriminatory; another brief filed by the DeFi Education Fund, a16z, Paradigm, Uniswap, and others states that the legal definitions are ambiguous and could potentially cover developers and decentralized protocols that do not hold client funds.

The lawsuit was initiated by the Crypto Council for Innovation and the Blockchain Association, following Illinois's prior agreement to suspend enforcement of the tax until July 1, 2027.