California’s proposed one-time 5% billionaire wealth tax raises tech and crypto exodus concerns
California is advancing a 2026 ballot initiative — the "Billionaire Tax Act" — proposing a one-time 5% wealth tax on residents with net assets above $1 billion as of Jan. 1, 2026. Sponsored by SEIU–United Healthcare Workers West and currently collecting signatures to reach the November 2026 ballot, the measure would tax unrealized gains across asset classes, explicitly including cryptocurrencies, private equity, public stocks, real estate, art and luxury goods. Taxpayers can pay up front or in five annual installments with 7.5% interest; primary residences, pensions and retirement accounts are exempt. Supporters estimate hundreds of billions to more than a trillion dollars in one-time revenue earmarked for healthcare, education and housing. Tech and crypto figures — including Kraken cofounder Jesse Powell, Bitwise CEO Hunter Horsley, Chamath Palihapitiya and Nic Carter — warn the tax would force sales of illiquid holdings, accelerate capital and talent flight, reduce local investment and philanthropy, and damage California’s innovation economy. Reports indicate some wealthy residents are considering reducing ties to California. For crypto traders, key takeaways: the proposal explicitly counts cryptocurrencies as unrealized taxable assets, increasing the risk that founders and capital will relocate or liquidate holdings; if enacted, local venture activity and hiring could decline, potentially lowering regional crypto deal flow and startup activity. Timeline: still in signature-collection phase; if qualified it would appear on the November 2026 ballot.
Bearish
Direct crypto market implications are negative. The proposal explicitly treats cryptocurrencies as taxable unrealized assets — that raises the prospect of forced sales or preemptive liquidation by wealthy holders and founders to meet a one-time levy, increasing short-term selling pressure. Announcements and threats of relocation by major crypto figures could also reduce local venture funding, hiring and project launches in California, lowering regional deal flow and long-term onshore investment into crypto startups. In the short term, expect increased volatility and potential downwards pressure on crypto prices if large holders sell or transfer assets. In the medium to long term, the impact depends on whether the measure qualifies and is enacted; if it fails to qualify or is defeated, negative pressure may be temporary. If enacted, structural shifts — including relocation of capital and talent out of California — could reduce U.S. West Coast crypto innovation and liquidity, producing persistent, though diffuse, bearish effects on market activity tied to that ecosystem.