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<p style="text-align: justify">The US Department of Justice, major financial trade associations, and a coalition of decentralized finance firms have joined legal efforts to challenge a new Illinois law imposing a 0.2% tax on digital asset transactions. These groups claim that the measure unfairly targets cryptocurrency activities and could require taxes even in cases where no profit is realized by investors.</p>
<h2 id="widespread-opposition-to-digital-asset-tax">Widespread opposition to digital asset tax</h2>
<p style="text-align: justify">Over the past week, significant filings have emerged in federal court as legal challenges to Illinois’ digital asset tax gather momentum. The Justice Department entered a statement of interest, while the US Chamber of Commerce and the Securities Industry and Financial Markets Association (SIFMA) submitted an amicus brief. Meanwhile, a coalition of blockchain entities—such as venture capital firms Andreessen Horowitz and Paradigm, and crypto protocols <a href="https://en.coin-turk.com/uniswap-faces-potential-legal-challenges/" rel="noopener noreferrer nofollow">Uniswap</a> and Aave Labs—filed a joint brief, as announced by the Blockchain Association and Crypto Council for Innovation.</p>
<p style="text-align: justify">Illinois Governor J.B. Pritzker signed the tax into law in June. The measure places a 0.2% levy on the value of digital assets whenever they are exchanged, transferred, or stored within the state, regardless of whether any gain or loss is made on the transaction.</p>
<p style="text-align: justify">Legal challenges quickly followed. The Digital Chamber filed a lawsuit against Illinois Attorney General Kwame Raoul and Department of Revenue official David Harris in July. In August, a separate complaint was brought by the Blockchain Association and Crypto Council for Innovation. Lawmakers delayed the start date of the tax from January 1, 2027, to July 1, 2027, in response to the pending litigation.</p>
<p style="text-align: justify">State projections suggest the tax could generate $60 million in fiscal year 2027. Illinois House Speaker Emanuel Welch positioned the law as part of efforts to close corporate loopholes and require major technology and crypto firms to “pay their fair share.” The governor’s office has not issued further statements on the policy.</p>
<h2 id="business-and-industry-groups-high-compliance-costs-potential-legal-conflicts">Business and industry groups: High compliance costs, potential legal conflicts</h2>
<p style="text-align: justify">Business groups warn the tax would have sweeping implications for banks, broker-dealers, custodians, and asset managers operating both in Illinois and nationally. SIFMA and the US Chamber of Commerce argued in their Nov. 6 filing that financial institutions risk facing significant compliance costs and penalties, even in routine scenarios such as investor losses or internal asset transfers.</p>
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 <p>“This means that a customer who loses money owes the same tax as a customer who earns a profit. And a customer who moves the same asset between two accounts faces tax (potentially on both ends) without a sale, a gain, or a change in beneficial ownership.”</p>
</blockquote>
<p style="text-align: justify">The filing warned that firms will need specialized systems to identify Illinois clients, value different digital assets, and track taxable events. They further stated that failure to comply could result in criminal penalties. The groups also contended that the tax singles out digital asset transactions for unique treatment, unlike similar transactions with traditional assets, thereby raising concerns about compliance with federal internet tax rules and the constitutional principles governing interstate commerce.</p>
<h2 id="federal-and-defi-voices-raise-constitutional-and-operational-concerns">Federal and DeFi voices raise constitutional and operational concerns</h2>
<p style="text-align: justify">On Nov. 6, the Justice Department voiced concerns that Illinois’ approach undermines federal initiatives aimed at fostering cryptocurrency innovation and maintaining US leadership within the digital asset sector. The DOJ highlighted federal measures such as the establishment of a Strategic <a href="https://en.coin-turk.com/130000-more-btc-added-to-whale-wallets-for-3-5-billion-what-is-the-next-move-for-bitcoin/" rel="noopener noreferrer nofollow">Bitcoin</a> Reserve and the GENIUS Act, which created nationwide regulatory standards for stablecoins, and argued that state-level tax policies at odds with these frameworks could create regulatory conflicts.</p>
<p style="text-align: justify">DeFi firms added their perspective in a Nov. 11 filing, cautioning that the structure of Illinois’ tax policy risks imposing tax collection and reporting duties on software developers and other blockchain ecosystem participants. These entities often do not have access to user data, do not control customer accounts, and lack the means to collect or remit taxes on behalf of end users.</p>
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 <p>Industry representatives raised warnings about unintended consequences, noting that software developers and protocol maintainers could be held liable for transactions over which they have neither informational access nor practical control.</p>
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<p style="text-align: justify">As courts consider legal arguments from all sides, investors and digital asset service providers are preparing for potential operational challenges in the event the Illinois tax moves forward. Many are also seeking tools to help monitor new state-level obligations and keep track of rapidly evolving policy landscapes.</p>
<p style="text-align: justify">In light of debates around state-level crypto regulation, tools like <a href="https://lk.software/cryptoappsy/" rel="noopener noreferrer nofollow">CryptoAppsy</a> can help investors and compliance professionals track the latest digital asset policy developments in real time. The platform’s live news monitoring supports market participants in quickly identifying regulatory changes that could affect their holdings or operations within specific states.</p>
<p>The post <a href="https://en.coin-turk.com/us-justice-department-industry-groups-back-lawsuit-against-illinois-0-2yuzde-crypto-tax/" rel="noopener noreferrer nofollow">US Justice Department, industry groups back lawsuit against Illinois 0.2% crypto tax</a> appeared first on <a href="https://en.coin-turk.com" rel="noopener noreferrer nofollow">COINTURK NEWS</a>.</p>

US Justice Department, industry groups back lawsuit against Illinois 0.2% crypto tax

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