Eighteen Crypto Firms Tell Court Illinois 0.2% Tax Is Unworkable

Eighteen crypto companies and trade groups filed an amicus brief on Thursday arguing that Illinois' planned 0.2% tax on digital asset business activity is legally unenforceable as written. The filing, submitted to a court reviewing the measure, names a16z, Uniswap, Aave Labs, Chainlink Labs, Paradigm, Phantom Technologies, Stand With Crypto and the DeFi Education Fund among its signatories.

The tax, originally scheduled to take effect on January 1, targets firms with more than $100,000 in receipts and is currently on hold while legal challenges proceed. Illinois has agreed to a six-month delay from the original implementation date, pushing the start date to mid-2025 at the earliest — assuming the litigation does not void the measure first.

The core of the industry's argument is definitional. The brief contends that the statute's concept of "digital asset business activity" fails to distinguish between custodial brokers and the developers of non-custodial software, leaving signatories unable to determine who counts as a crypto broker or which activities fall within the taxable range. They argue the law is unconstitutionally vague and discriminates against the digital assets industry.

The Illinois Department of Revenue's interpretation, the brief states, would be "sweeping in developers, providers and other network participants who would not be able to collect a tax from customers they do not have, direct payments from assets they do not control or determine a transaction's location from information they do not have."

Why non-custodial software breaks the broker model

The industry filing draws a sharp line between a traditional broker and a software developer. A broker, in the industry's framing, is "a person responsible for carrying out transfers of digital assets on another's behalf." Developers of non-custodial software occupy a different position entirely.

"Developers and providers of non-custodial software keep no accounts or customer records and have no technological ability to collect or store them," the brief argues. Under the state's reading, the filing continues, "developers and providers that lack custody of user assets, customer account relationships or access to customer-location information could face obligations they have no practical ability to perform."

The tax, as the industry reads it, would capture "people who write software that others use to transact for themselves." Those developers have no traditional customers, no custody of user assets and no visibility into who uses their code or where those users are located.

The operational consequence is straightforward: a developer cannot remit 0.2% of a transaction value it never sees, collected from a customer it never had, in a jurisdiction it cannot identify. In plain words, the industry is telling the court that the tax assumes a data trail that non-custodial architecture deliberately does not create.

What happens next

The amicus brief does not decide the case; it informs the court hearing the substantive challenge to the law. The measure remains suspended pending that litigation, and the six-month delay the state granted moves any enforcement window to July 2025 at the earliest. Whether Illinois revises its definitions, narrows the scope to custodial intermediaries or loses the challenge outright will determine whether the projected revenue materializes at all — a question the court, not the Department of Revenue, will now answer first.