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On November 12, the U.S. Department of Justice (DOJ), the American Chamber of Commerce, and SIFMA filed legal briefs in court to contest the implementation of the Illinois Digital Asset Tax Act. A coalition of crypto companies led by Andreessen Horowitz, Paradigm, and Uniswap Labs joined this action, requesting permission to file an amicus curiae brief in the same case.
Why it matters
The move marks a common front between traditional federal institutions and the decentralized finance sector. The tax in question, established by Public Act 104-468, provides for a 0.2% levy on the value of digital assets by brokers. The groups involved argue that the regulation is unenforceable against decentralized exchanges (DeFi) because non-custodial software developers do not have direct clients from whom to collect the tax nor visibility into transaction locations.
According to Michael Selig, chairman of the CFTC, the law represents an unjustified “sin tax” on blockchain technology. Crypto organizations further argue that the state’s draft rules unduly extend the definition of “broker,” in conflict with federal regulations and the Federal Internet Tax Freedom Act.
The numbers
The contested tax rate is set at 0.2%. The coalition requesting the amicus brief includes the DeFi Education Fund and 17 other crypto organizations or companies. Two separate legal cases, one led by The Digital Chamber and the other by the Blockchain Association together with the Crypto Council for Innovation, have been consolidated into a single proceeding before the District Court of Sangamon County.
What remains to be seen
It is not yet known whether the court has approved the request to postpone the start of the tax to July 1, 2027, proposed previously relative to the statutory deadline of January 1, 2027. The outcome of the litigation before the U.S. Supreme Court, which also concerns jurisdiction over indefinite-dated equity futures, remains open.
Sources: Decrypt, Unchained, Block Media.
This article is for informational purposes only and does not constitute financial advice or an investment recommendation.
* Content created with the assistance of artificial intelligence systems.