The Crypto Council for Innovation and Blockchain Association are asking an Illinois state court to temporarily suspend a new cryptocurrency tax as they continue challenging the measure on federal and constitutional grounds.
The groups filed a preliminary-injunction motion Wednesday, weeks after launching their lawsuit against the tax. They want the Sangamon County Circuit Court to prevent the law from taking effect while the broader legal dispute is being considered.
The two organizations, along with The Digital Chamber, previously argued that federal law overrides Illinois’ Digital Asset Tax Law, which lawmakers approved earlier this year. The measure imposes a 0.2% tax on certain digital asset-related gross receipts generated by businesses located in Illinois or providing services in the state. It applies to entities with more than $100,000 in gross receipts and is scheduled to become effective Jan. 1, 2027.
In their latest filing, the groups said businesses represented by their memberships are already facing significant costs because they have begun developing compliance systems for the new tax. They described the resulting impact as “serious and irreparable harm.”
CCI CEO Ji Hun Kim argued that companies could spend millions preparing for a tax that the organization believes infringes on their constitutional rights. He also criticized the lack of clarity surrounding which activities will be subject to the tax and when the liability would arise.
Blockchain Association CEO Summer Mersinger said Illinois would be unable to spend the revenue generated by the tax while the lawsuit remains unresolved. She argued that postponing the measure would therefore have limited consequences for the state while preventing substantial costs for affected businesses.
The Wednesday filing repeats the industry’s central argument that Illinois’ tax is blocked by both the Internet Tax Freedom Act and the U.S. Constitution.
The groups further contend that the state is unfairly distinguishing digital assets from other financial services. They pointed to Illinois’ existing tax structure, which generally does not impose sales taxes on transactions involving financial assets, instead focusing on income and capital gains. The state’s sales and use tax laws also generally exclude intangible personal property and specifically exempt money and precious metals.
The dispute could also have consequences beyond Illinois. Mersinger warned that other states could pursue similar taxes if Illinois successfully defends its legislation.
“If this Act stands, Illinois will not be the last state to try it,” she said, signaling the industry’s concern that the case could establish a precedent for broader state-level crypto taxation.
