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Crypto leaders warn California wealth tax could drive capital out

Written by Mahathir BayenaPublished Dec. 29 2025Last Updated Dec. 29 2025

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Senior figures in the crypto industry have criticised a proposed 5% wealth tax on billionaires in California, warning it could accelerate capital flight.

The measure, known as the 2026 Billionaire Tax Act, would apply a 5% levy on net wealth above $1 billion.

Proponents say the tax would help fund healthcare services and state assistance programmes.

Critics argue the structure would discourage innovation and investment within the state.

The proposal would partially tax unrealised gains, forcing some individuals to sell assets.

Payments could be made in a lump sum or spread over five years with interest.

Bitwise chief executive Hunter Horsley said the tax risks harming California’s economic base.

Crypto executives warned that wealthy founders could simply relocate to avoid the levy.

Kraken co-founder Jesse Powell said the measure would be a breaking point for many.

I promise you this will be the final straw.

Jesse Powell said.

He added that billionaires would take spending, jobs and philanthropy elsewhere.

Castle Island Ventures partner Nic Carter questioned whether lawmakers assessed capital mobility.

Capital is more mobile than ever.

Nic Carter said.

He compared one-off wealth taxes to signals of future financial instability.

ProCap BTC chief investment officer Jeff Park echoed concerns over investor flight.

Supporters of the proposal say it would improve childcare, housing and education.

California congressman Ro Khanna defended the tax as pro-innovation in the long term.

He argued stronger social infrastructure benefits the broader economy.

Dune chief executive Fredrik Haga cited Norway’s experience with wealth taxes.

Taxes on unrealised capital gains have led to more than half of Norway’s top wealth moving abroad.

Fredrik Haga said.

He said the policy raised less revenue than expected.

Critics also questioned whether funds would be spent effectively.

A recent state audit highlighted unaccounted or poorly justified expenditures.

Austin Campbell said governance issues should be addressed before raising taxes.

Horsley argued politicians should fix inefficiencies rather than confiscate private assets.

Politicians have long forgotten their role is to be a servant.

Hunter Horsley said.

Observers say the debate highlights tensions between taxation, innovation and capital mobility.

The proposal is expected to face intense lobbying ahead of the 2026 ballot.

At the time of reporting, Bitcoin price was $89,316.32.