Early Bitcoin hodlers planning to renounce citizenship need to watch out for the Exit Tax trap.

Here's the reality: if your BTC holdings exceed $2M (pretty standard for OGs who got in with almost nothing), the IRS slaps a "covered expatriate" label on you. And that's where it gets painful.

The nightmare scenario? Uncle Sam essentially treats you like you liquidated your entire Bitcoin position the day before you officially renounce. We're talking about taxation on unrealized gains—a concept that sounds wild until you realize it's already law.

Why does this matter? Because that Exit Tax can hit you with a massive bill based on your current holdings, not your original cost basis. For someone sitting on millions in accumulated value, that's a catastrophic tax event.

So if renouncing citizenship is on your radar—especially with serious crypto bags—you need professional tax counsel, not gut instinct. The path out isn't as simple as filling paperwork and moving jurisdictions. The US government has built tripwires into the expatriation process specifically for high-net-worth individuals.

Don't get caught off-guard by Exit Tax mechanics. Plan ahead.