California's proposed 5% wealth tax on *unrealized* gains, including unsold crypto, is a policy nightmare waiting to happen. It directly targets the illiquid paper wealth of builders and long-term holders.
My critical take: This isn't just about "pushing innovation outside the US." It's about creating a perverse incentive to *never* build or hold major assets in California. For crypto, with its wild volatility, being taxed on paper gains during a bull run could force catastrophic, liquidity-crushing sales in a bear market. It misunderstands the very nature of asset liquidity.
Some firms may still expand here, but the smart capital is infinitely mobile. This policy risks making the US a museum of crypto, not a hub.
Would you move your holdings or operations over this? Debate below.
