Illinois Digital Asset Tax Act Faces Constitutional Challenge

The state of Illinois is at the center of a legal battle over its Digital Asset Tax Act, which levies a 0.2% tax on digital asset business activities.

Two separate lawsuits have been filed against the law by industry groups, including the Blockchain Association and the Crypto Council for Innovation, which argue that it discriminates against interstate commerce and has constitutional issues.

The tax targets firms with more than $100,000 in gross receipts from digital asset activities connected to Illinois, but some estimates suggest compliance costs could exceed $1 million per firm.

The lawsuits are built on the premise that the tax is unconstitutional under various laws, including the Commerce Clause and the Internet Tax Freedom Act.