Armstrong: – This is something third-world countries do

Brian Armstrong, chief executive and billionaire behind the crypto exchange Coinbase, is leveling sharp criticism at a tax policy initiative that could end up on the California ballot in November 2026. According to Yahoo Finance, he describes the proposed measure as something that belongs in countries with weak institutions, not in the United States — and he has not ruled out leaving the state before New Year.

The backdrop is Proposition 40, also known as the "Billionaire Tax Act," which proposes a one-time levy of 5 percent on net wealth exceeding one billion dollars for California residents and trusts. Wealth would be measured as of January 1, 2026, and the tax would be due with the 2027 tax return.

"Deeply un-American" — that is how Armstrong describes the proposed tax measure, according to Yahoo Finance
Coinbase CEO threatens to leave California before New Year - Bilde 1

What does the tax proposal say?

Proposition 40 is a combined constitutional initiative and legislative proposal that will be put to a public vote on November 3, 2026. The tax targets residents with a net worth exceeding one billion dollars and includes an important and controversial detail: it also applies to unrealized gains — that is, value that has not been realized through a sale.

Real estate, retirement accounts, and pension plans are exempt. Tax revenues are earmarked with 90 percent going to the Medi-Cal health program and 10 percent to food assistance and public education. The initiative has been put forward by the union SEIU United Healthcare Workers West.

Coinbase CEO threatens to leave California before New Year - Bilde 2

Unrealized gains — the heart of the conflict

The most contested element is the taxation of wealth that has not been converted into cash. For tech and crypto founders, where the bulk of wealth is often locked up in privately held companies or long-term crypto holdings, this could create acute liquidity problems.

Palmer Luckey, co-founder of defense technology company Anduril, is among those who have issued stark warnings. According to research related to the matter, he claims the tax would force "founders like me to sell large portions of our companies." Names such as Peter Thiel and Google co-founder Larry Page are also reportedly considering cutting ties with California as a result of the proposal — though these are unverified claims circulating in the tech press.

The National Taxpayers Union claimed in February 2026 that the tax threat had already motivated wealthy individuals with a combined net worth of over $1 trillion to relocate out of the state. This figure has not been independently confirmed.

Nine U.S. states have no state income tax — among them Florida, Texas, and Wyoming

Political divide

California Governor Gavin Newsom has, according to available research, expressed opposition to state wealth taxes and warned that such measures could trigger a downward spiral among states in tax policy. He argues that California cannot isolate itself from the other 49 states in the union.

On the other side, Congressman Ro Khanna, who represents Silicon Valley, argues that tech billionaires will in practice stay put due to the region's unique concentration of talent and capital. Ben Narasin of Tenacity Venture Capital, however, fears the opposite: that the tax will drive entrepreneurship and innovation out of the state.

For the crypto industry, California is already a demanding tax environment. The state taxes gains from cryptocurrency as ordinary income, with a marginal tax rate of up to 13.3 percent — among the highest in the United States.

What about Norwegian investors?

Direct Norwegian exposure to this is limited, but Norwegian investors with positions in Coinbase (COIN) or funds with heavy tech exposure to California should take note of the political risk. A potential capital flight of this magnitude could affect the valuation of California-based companies over the longer term, even if the market effects remain uncertain for now.

With Bitcoin trading at around $77,750 and a Fear & Greed Index of 73 out of 100, the crypto market is in risk-on mode, but crypto-related equities could be affected if regulatory and tax uncertainty escalates in the United States' largest state.