If a state can skim 0.2% off every crypto trade, other states will want the same cut. Illinois is where the first court test of that idea is playing out, and the filings are piling up.

On November 13, a coalition led by Andreessen Horowitz, Paradigm, Uniswap and the DeFi Education Fund filed an amicus brief in Sangamon County Circuit Court against Illinois' Digital Asset Tax Act, according to reports carried by TradingView and KuCoin. The brief backs the crypto trade groups already suing to stop a tax that Gov. JB Pritzker signed into law on June 16 as part of the state's fiscal 2027 budget. Eighteen firms and groups signed it, including Aave Labs, Chainlink Labs, Figment, Phantom, the Solana Policy Institute and Stand With Crypto.

The law, Senate Bill 3019, puts a 0.2% tax on the privilege of receiving digital asset business activity from a broker. It applies when an Illinois customer exchanges, transfers or stores digital assets for consideration. Illinois was the first state to try it, and state projections put the revenue at roughly $60 million a year.

Plenty of coverage still says the tax begins January 1, 2027. It doesn't. On October 1, the state agreed with the Digital Chamber and the Illinois Blockchain Association to a stipulated order that pushes the effective date to July 1, 2027, and PwC reports the court approved it. The delay buys the judge time to rule on the constitutional claims before anyone has to collect a cent. It doesn't settle the case.

Two suits sit in the same court, under docket numbers 2026-MR-000271 and 2026-MR-000312. The Digital Chamber sued in July, naming Attorney General Kwame Raoul and Revenue Director David Harris. The Blockchain Association and the Crypto Council for Innovation filed their own challenge. The Digital Chamber argues the tax violates the Illinois and US constitutions and the federal Internet Tax Freedom Act.

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The new brief goes after the law's reach. It argues the statute is overly broad, treats blockchain-based transactions less favorably than comparable activity, and fails to separate taxable digital-asset businesses from the software and network infrastructure that lets people transact on their own. Frankly, that last point is the one Illinois will struggle with. A protocol developer has no customer list and no way to tell which users live in Springfield, yet the brief warns that developers and maintainers could be pulled into tax collection duties.

It isn't only a crypto problem

A week earlier, on November 6, the US Chamber of Commerce and SIFMA filed their own amicus brief, with Steptoe LLP acting as the Chamber's outside counsel. The Chamber's litigation page says it argues the tax violates the Internet Tax Freedom Act and the dormant commerce clause. SIFMA's version of the argument is the more uncomfortable one for Illinois. Banks, broker-dealers and custodians that handle digital assets could fall under the same definition, and Coin-Turk's summary of the brief says they would need new systems just to identify Illinois clients and track taxable events. It also says customers would owe the tax on losing trades as well as winning ones, and on transfers between their own accounts where nothing was sold.

Now the numbers. A 0.2% levy sounds small if you buy bitcoin twice a year. It isn't small if you trade for a living. A market maker or arbitrage desk that turns the same capital over dozens of times a day pays on every leg, and a round trip costs 0.4%. Plenty of strategies run on margins of a few hundredths of a percent, so that math doesn't leave a thinner profit. It leaves no strategy. Based on that arithmetic, you'd expect the high-frequency firms to leave Illinois customers or route around the state, which is the same worry the exchanges and custodians have, only with more lawyers behind it.

The copycat risk is the part other state capitals will be watching. No other state has moved a similar bill yet, but the logic is easy to copy: it's a budget line that taxes an industry with few voters in the room. If Sangamon County upholds Illinois, every state with a budget gap has a template. If the court strikes it down under the Internet Tax Freedom Act or the commerce clause, the template dies on the first try. That's why a16z and Uniswap are filing briefs in a county court in central Illinois.

No hearing date on the merits has been reported yet. Until the judge rules, the July 1, 2027 start stands.

Also read: BNY adds Figment to bring Ethereum staking to its custody clients • CFTC Chair Selig says crypto firms are signing up for his agency's rules as Congress stalls • Lightning Labs launches pi402 so AI agents can pay for inference in bitcoin

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