Uniswap, a16z and Paradigm back challenge to Illinois DeFi tax - Cryptonews.net

The coalition’s brief was filed in the Circuit Court of Sangamon County, backing a challenge brought by the Crypto Council for Innovation (CCI) and the Blockchain Association.

Other signatories to the brief include the DeFi Education Fund, Aave Labs, Aptos Labs, Aztec Labs, Chainlink Labs, Jito Labs, Orca Creative, Phantom Technologies, Multicoin Capital, the Solana Policy Institute, and Stand With Crypto.

The group warns that the state’s draft rules would turn fee-charging decentralized exchanges and their frontends into tax-collecting brokers, a role that autonomous software cannot perform.

Industry groups and federal support

The coalition’s legal battle is not without support from the federal level. The Blockchain Association noted that the US Department of Justice filed a statement of interest on November 6, arguing the tax “undermines federal policy and American leadership in digital assets.”

The US Chamber of Commerce and the Securities Industry and Financial Markets Association (SIFMA) also filed their own amicus brief the same day.

These organizations warned that the levy would go beyond crypto-native firms to reach banks, broker-dealers, and custodians that offer digital asset products.

Illinois tax law and its impact

The legislation at the center of the dispute is the Illinois Digital Asset Tax Act, signed by Governor JB Pritzker as part of the state’s fiscal 2027 budget in June 2026.

It imposes a 0.2% charge on the value of a digital asset each time an Illinois customer exchanges, transfers, or stores it through a broker.

The charge applies even when there is no sale or gain made by the customer, and it carries a class 3 felony charge for noncompliance.

Stakeholders have since taken the state to court over the law, with the Digital Chamber suing in July, followed by CCI and the Blockchain Association in September.

DeFi broker rule and federal reversal

The dispute echoes a previous conflict over a federal rule that would have forced DeFi platforms to report user transactions as if they were brokers.

In December 2024, the Treasury Department finalized a rule requiring platforms that facilitate digital asset transactions to file Form 1099-DA on user activity.

However, President Trump killed the rule on April 10, 2025, by signing a congressional review act resolution to prevent it from taking effect in 2027.

The current dispute in Illinois will test whether the state can prevail where the federal government had a rethink, or if the industry can successfully wave off a state’s rule that challenges the fundamental operation of decentralized exchanges.

Next steps and postponement

In October, the state agreed to postpone the tax from January 1, 2027, to July 1, 2027, while the litigation proceeds.

The coalition also flagged a draft provision in the act that requires brokers to store the private keys of customers, saying it would expose users to theft.

They have asked regulators to swap the term for “public keys” instead.

The outcome of this legal challenge will set a precedent for how state governments can regulate digital assets in the absence of federal guidance.