DOJ and Wall Street Coalition Back Legal Challenge to Illinois Digital Asset Tax

The U.S. Department of Justice, the U.S. Chamber of Commerce, Wall Street industry groups, and major decentralized finance developers filed briefs backing a lawsuit to overturn the Illinois Digital Asset Tax Act ¹. The filings, submitted in the Circuit Court of Sangamon County, support a legal challenge initially brought by the Crypto Council for Innovation and the Blockchain Association ¹.

The legal dispute targets an Illinois statute that levies a 0.2% tax on the gross value of digital assets whenever an Illinois resident transfers, exchanges, or stores tokens through a broker ¹. The fee applies regardless of whether a transaction generates a capital gain, results in a sale, or changes underlying asset ownership ¹. In August, the trade groups sued to invalidate the framework, prompting the state in October to delay enforcement until July 1, 2027 ¹.

Broad Impact Beyond Native Crypto

Filings submitted by traditional finance and decentralized technology advocates contend that the statute creates sweeping compliance risks ¹. In a joint amicus brief filed on Nov. 6, the U.S. Chamber of Commerce and the Securities Industry and Financial Markets Association argued that the tax obligates traditional banks, broker-dealers, advisers, and custodians to construct tracking systems to trace Illinois counter-parties under threat of felony penalties ¹.

A separate amicus brief submitted on Nov. 11 by a decentralized finance coalition—including Andreessen Horowitz, Paradigm, Uniswap, and the DeFi Education Fund—warned that the Illinois Department of Revenue's draft rules encompass autonomous protocols and software developers ¹. The coalition emphasized that decentralized networks hold no client balances and cannot track geographical transactions or withhold taxes for an estimated 2.64 million Illinois asset holders ¹. In its own statement of interest filed on Nov. 6, the Justice Department argued the statute conflicts with federal digital asset priorities by targeting crypto with arbitrary burdens absent from traditional asset classes ¹.