The Blockchain Association and Crypto Council for Innovation have filed a joint lawsuit challenging Illinois’ Digital Asset Tax Act, setting up a legal fight over whether the state can impose a transaction tax on digital asset activity.

The lawsuit was filed in Illinois state court on August 21 and seeks to block the law before it takes effect on January 1, 2027. The Digital Asset Tax Act would impose a 0.2% tax on the value of digital asset transactions.

The industry groups argue that the tax violates the dormant Commerce Clause, the federal Internet Tax Freedom Act, and state due process protections.

That makes this more than a local tax dispute.

If allowed to stand, the law could become a model for other states looking to tax crypto…