(The Center Square) – Coinbase, the largest U.S.-based cryptocurrency exchange, is reincorporating in Texas. Its reason: failed policies in Delaware and Texas’ new business court and business friendly environment.
Its chief legal officer, Paul Grewal, said the decision to leave Delaware and reincorporate in Texas “was not made lightly, but we’ll always do what’s best for our customers, our employees, and our shareholders.”
“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,” he said, adding that Texas’ “corporate legal framework offers the right mix of efficiency, predictability, and fairness to be our home for incorporation.”
He also thanked Gov. Greg Abbott for “all he has done to create an environment that welcomes ambitious companies like Coinbase with open arms,” adding that Texas’ approach “is the bedrock of innovation in America.”
He also outlined is reasoning in a Wall Street Journal op-ed, stating that “Delaware has left us with little choice. Delaware’s legal framework once provided companies with consistency. But no more.”
Coinbase CEO Brian Armstrong added, “Coinbase has always been about increasing economic freedom, and this factors into the state where we choose to incorporate. Texas has a strong culture of celebrating builders who are growing our economy, creating prosperity for all. They’ve also embraced crypto. By this metric, it was an easy choice.”
Historically, Delaware has been considered a legal home for business entities because of its business-focused Court of Chancery. Under the Biden administration, anti-business sentiment and rulings increased, eroding trust in that system, causing businesses to reorganize and relocate elsewhere, including to the business-friendly state of Texas, the governor, state lawmakers and others argue.
Coinbase followed other companies reincorporating in Texas after the state legislature in 2023 created the first-of-its-kind specialized trial court to oversee complex business-to-business litigation. It first convened last September.
This year, the legislature passed SB 29 to create a series of corporate reforms governing certain business entities. It “enhances the predictability and efficiency of Texas entity law and governance while maintaining strong protections for entity owners and transparency,” The Center Square reported. They include codifying the business judgment rule to allow corporations to establish a minimum ownership threshold before a shareholder or group of shareholders can pursue a derivative claim, among other provisions.
The legislature also passed HB 40 to amend state law to enhance Texas Business Court operations statewide, expanding subject matter jurisdiction to include intellectual property, clarifying its supplemental jurisdiction, allowing companies to designate the court as the exclusive venue in their governing documents for dispute resolution, among other measures.
The new laws provide business decision makers “with certainty that sound business judgments made in the best interest of shareholders will not be second-guessed by courts. Absent acts of violent crime, business decisions are to be made by the elected officers and shareholders, not by unelected judges,” Abbott said when signing them into law. “It also eliminates rogue shareholders with just a handful of shares of stock in a company from being able to hold a company hostage from the ability to make sound business decisions.”
The creation of the court and business friendly legislation was championed by Texans for Lawsuit Reform, which for decades advocated for policy changes that helped catapult Texas to the top of business rankings nationwide. TLR President and General Counsel Lee Parsley earlier this year said that establishing the Texas Business Court in 2024 “was a significant investment in Texas’s economic growth and development, creating an efficient process to help streamline the resolution of lengthy and complicated business cases.” The new laws include enhancements “that will unleash the full potential of the Texas Business Court and entice more businesses to relocate and operate in Texas.”
A few months later, his prediction proved true. Coinbase and other major exchanges, including Texas’ new stock exchange (TXSE), the New York Stock Exchange Texas and Nasdaq Texas, headquartered in Dallas, all made major announcements this week, The Center Square reported.
“Barely a year after opening its doors, the Texas Business Court – the first of its kind in Texas – is exceeding expectations,” Parsley told The Center Square. “With more than 220 cases filed across the state’s five largest cities, the Texas Business Court is quickly becoming a focal point for resolving complex corporate disputes.”
Because of the new court, new business friendly laws and Abbott’s support, Texas is positioned “as the preeminent jurisdiction for relocation and reincorporations,” he said.
