Coinbase to Leave Delaware for Bitcoin-Friendly Texas
Coinbase, the largest U.S. crypto exchange, is relocating its incorporation from Delaware to Texas, citing a crypto-friendly environment and better regulatory predictability. Chief Legal Officer Paul Grewal and CEO Brian Armstrong highlighted Texas' strong culture of supporting innovation and economic growth. Delaware, once a popular state for corporate incorporation due to its Chancery Court's consistency, has faced criticism for unpredictable rulings. The move follows a trend of major companies, like Tesla, relocating to Texas for lower taxes and business-friendly regulations. Coinbase, which went public in 2021, continues to expand its offerings, recently signing a deal with JPMorganChase and applying for a National Trust Company Charter.
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Coinbase Reincorporates in Texas
Coinbase, America's biggest crypto exchange by trading volume, is leaving Delaware to reincorporate in Texas, citing a crypto-friendly environment and a "strong culture of celebrating builders" as reasons for the decision. The publicly traded company, which follows a remote-first work policy with its employees, had been legally based in Delaware. However, in a regulatory filing with the SEC on Wednesday, Coinbase stated that Texas was a better fit for its operations.
Legal Environment in Texas vs. Delaware
In an op-ed published in The Wall Street Journal, Coinbase Chief Legal Officer Paul Grewal explained the rationale behind the move. He wrote: "Texas offers efficiency and predictability, in part thanks to recent corporate-law reforms that enhance governance flexibility and legal predictability." Grewal criticized Delaware's legal framework, saying: "Delaware's legal framework once provided companies with consistency. But no more. Delaware's Chancery Court in recent years has been rife with unpredictable outcomes."
Comments from Coinbase CEO
Coinbase CEO Brian Armstrong shared his perspective in a post on X (formerly Twitter): "Coinbase has always been about increasing economic freedom, and this factors into the state where we choose to incorporate." He praised Texas for its strong culture of supporting builders and embracing crypto, stating: "Texas has a strong culture of celebrating builders who are growing our economy, creating prosperity for all. They've also embraced crypto."
Background on Delaware and Corporate Relocations
Historically, American companies have chosen Delaware for incorporation due to its Court of Chancery, known for efficiently settling corporate disputes. However, in recent years, several top U.S. companies, including Tesla and Charles Schwab, have relocated to Texas to benefit from lower taxes and business-friendly regulations. For example, Tesla CEO Elon Musk posted in January 2024 on X: "Never incorporate your company in the state of Delaware."
Updates on Coinbase’s Business Operations
Nasdaq-listed Coinbase, known for allowing users to buy, sell, and speculate on cryptocurrencies, went public in 2021. Recently, the company signed a deal with JPMorganChase to simplify the process of buying crypto for its customers. Moreover, Coinbase also filed for a National Trust Company Charter with the Office of the Comptroller of the Currency. On Wednesday, Coinbase shares traded above $303, reflecting a slight drop of a percentage point, according to Yahoo Finance.
Recent Performance of Coinbase Stock
Despite its recent initiatives, Coinbase's stock (COIN) has been under pressure. Over the past month, it has declined by more than 14%, highlighting challenges facing the cryptocurrency market and the broader financial sector.