This fits into a larger trend of governments seeking to tax wealthy individuals more aggressively, especially as budget deficits grow. This could accelerate the adoption of crypto as a hedge against state overreach, but also increase regulatory risk for crypto as tax authorities develop tools to track on-chain activity.

California is reportedly conducting aggressive residency audits on billionaires who have moved to low-tax states to avoid the state's wealth tax.

California's Billionaire Audits Raise Stakes for Crypto Holders