Coinbase joins ‘Dexit’ trend: Why is crypto exchange ditching Delaware for Texas?

Coinbase announced that it is moving its corporate home from Delaware to Texas, joining Tesla and other major companies in the ‘Dexit’ movement.

Coinbase has joined Tesla and other major companies in what experts refer to as the ‘Dexit’ movement, in which businesses leave Delaware for more favorable states. Coinbase Global Inc., America’s largest crypto exchange, announced on Wednesday, November 12, that it has planned to move its corporate home from Delaware to Texas.

Coinbase joins ‘Dexit’ trend: Why is crypto exchange ditching Delaware for Texas?(Unsplash)

The move was approved by the company’s board on October 29. There was 78.4% of voting power supporting the change, according to bravenewcoin.com.

Chief Legal Officer Paul Grewal announced the news in an X post. “Today @Coinbase is announcing our decision to leave Delaware and reincorporate in Texas. This decision was not made lightly, but we’ll always do what’s best for our customers, our employees, and our shareholders,” he wrote.

“I’ve had great experiences in Delaware as a lawyer and judicial colleague, but the state no longer has a monopoly on corporate law. And it’s now facing stiff competition from other states that are innovating to offer the right environment for business and innovators to thrive,” Grewal further said.

“Coinbase is not the first company to make this decision. We surely won’t be the last. What we are seeing is a return to a free market economy in all things, including regulation and judicial review,” he added. “Competition among states is healthy and it empowers businesses and innovators that are on ambitious paths. Texas’ corporate legal framework offers the right mix of efficiency, predictability, and fairness to be our home for incorporation.”

Grewal thanked Texas Governor Greg Abbott for creating an environment that warmly welcomes companies. He added, “We remain laser focused on our mission to increase economic freedom by building the onchain economy.”

Why is Coinbase leaving Delaware?

Grewal elaborated on the decision in a Wall Street Journal op-ed, saying Delaware’s courts had become “rife with unpredictable outcomes.” He said the recent court created uncertainty for businesses and their leadership teams.

Coinbase also said that it had financial reasons for making the move. Previously, it paid about $250,000 in Delaware franchise taxes, something the company no longer needs to pay in Texas.

While Delaware has always been the top choice for American companies, Texas has also taken several initiatives to attract crypto companies. Texas became the first state to create a Strategic Bitcoin Reserve in June, with Abbott signing Senate Bill 21, allowing the state to buy and hold Bitcoin with public funds.

The state also offers unique benefits to Bitcoin miners through House Bill 591, which was passed in 2023. Under the law, energy companies can avoid severance taxes when they use waste gas for Bitcoin mining instead of burning it off.

Texas also passed Senate Bill 29 in May, which lets companies require shareholders own at least 3% of stock before filing lawsuits. It also allows businesses to choose specific Texas courts for disputes, and in most cases, protects company leaders from personal liability. Companies can also avoid jury trials in business disputes.