The Crypto Council for Innovation (CCI) and Blockchain Association are asking an Illinois court to block a new state crypto tax from taking effect while their legal challenge continues.

The organizations submitted a motion for a preliminary injunction Wednesday to the Sangamon County Circuit Court, several weeks after filing a lawsuit against the measure. They argue that allowing the tax to move forward would create significant and potentially irreversible costs for businesses in the crypto sector.

The groups initially joined The Digital Chamber in challenging Illinois’ Digital Asset Tax Law. Their lawsuit contends that federal law supersedes the state measure. Approved on the final day of Illinois’ legislative session, the law introduces a 0.2% tax on qualifying digital asset-related gross receipts earned by entities based in Illinois or providing services within the state.

The tax applies to businesses with gross receipts above $100,000 and is scheduled to take effect on Jan. 1, 2027.

In Wednesday’s court filing, the organizations said their member companies are already spending money to develop systems needed to comply with the upcoming tax. They argued that these expenses amount to “serious and irreparable harm” even before the law becomes effective.

CCI CEO Ji Hun Kim said affected companies could spend millions of dollars building compliance infrastructure for a tax the organization believes is unconstitutional. He also raised concerns about uncertainty surrounding which transactions would be subject to the levy and when the tax obligation would arise.

Blockchain Association CEO Summer Mersinger said delaying the tax would impose minimal costs on Illinois because the state would not be able to use the expected revenue while the lawsuit is pending. In contrast, she argued, businesses could suffer substantial losses if they are required to proceed with compliance efforts.

The latest filing repeats the industry’s position that the Internet Tax Freedom Act and the U.S. Constitution prevent Illinois from imposing the tax on digital asset transactions.

The groups also argue that Illinois is applying different tax treatment to digital assets than it does to other financial services. They point out that the state generally does not tax transactions or services involving financial assets through sales taxes, instead applying taxes to related income and capital gains. Illinois’ sales and use tax laws also generally exclude intangible personal property and explicitly exempt money and precious metals.

The case could ultimately influence crypto taxation policies in other states. Mersinger warned that Illinois could set an example for other jurisdictions if the legislation survives the court challenge.

The preliminary-injunction request represents the latest step in the industry’s effort to prevent Illinois’ crypto tax from taking effect while the courts determine whether the state has the legal authority to impose it.