Crypto Executives Warn California Wealth Tax Could Trigger Mass Exodus

Major cryptocurrency executives are voicing strong opposition to a proposed California wealth tax that would impose a 5% levy on unrealized capital gains, warning the measure could trigger an exodus of high-net-worth individuals from the state.

Kraken co-founder Jesse Powell called the proposal "the final straw," arguing that taxing unrealized gains and previously-taxed assets would force billionaires to relocate, taking their spending, philanthropy, and job creation with them. Bitwise CEO Hunter Horsley echoed these concerns, stating that many who "made this state great" are considering departure within the next 12 months.

The tax proposal, defended by crypto-friendly Representative Ro Khanna, aims to fund childcare, housing, and education initiatives. However, critics point to Norway's similar wealth tax as a cautionary tale. Dune CEO Fredrik Haga noted that Norway's measure resulted in more than half the wealth held by the country's top 400 taxpayers moving abroad while raising less revenue than expected.

Additional concerns have emerged regarding fund allocation. Pro-crypto lawyer John Deaton and professor Austin Campbell referenced a December California State Auditor report highlighting $70 billion in fraud and poorly justified expenditures, questioning whether new tax revenue would reach its intended targets.