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Coinbase filed Wednesday with the U.S. Securities and Exchange Commission to leave Delaware and reincorporate in Texas, in what the crypto giant’s chief legal officer cast as an unavoidable move, according to an op-ed he wrote in The Wall Street Journal and an excerpt posted on Coinbase’s site.
The largest U.S.-based cryptocurrency exchange becomes the latest company to join the DExit movement, a term used for companies leaving Delaware to reincorporate in states like Texas and Nevada, following Tesla and SpaceX’s reincorporations in Texas last year.
The shift comes as Texas has positioned itself as an alternative to Delaware’s traditional dominance in corporate law through its new Business Court and expanded legal protections for corporate directors.
“It’s a shame that it has come to this, but Delaware has left us with little choice,” Paul Grewal, Coinbase’s chief legal officer, wrote in the WSJ op-ed published today. “Delaware’s legal framework once provided companies with consistency. But no more.”
On the Coinbase blog, Grewal’s op-ed was excerpted in a version titled, “Why Coinbase sees greener pastures in Texas.”
Grewal, who practiced law for years in Wilmington, Delaware, pointed to what he described as unpredictable outcomes in Delaware Chancery Court as a key factor in the move. The court last year voided Elon Musk’s 2018 Tesla pay package, worth up to $56 billion, finding breaches of fiduciary duty, a ruling that helped spark Musk’s call for companies to leave the state, according to multiple reports.
“If your company is still incorporated in Delaware, I recommend moving to another state as soon as possible,” Musk wrote on X in February 2024 when he filed to change SpaceX’s state of incorporation, per CNBC.
Delaware’s long run as the ‘one-stop shop’
Delaware advantages were built on a long track record of stability, Grewal wrote. “For decades, Delaware was known for predictable court outcomes, respect for the judgment of corporate boards and speedy resolutions,” he said. He added that those traits had made Delaware the “one-stop shop” for major company incorporations, generating more than $1 billion in annual revenue for the state.
Texas, meanwhile, has moved to compete more directly.
Lone Star State lawmakers created the Texas Business Courts in 2023, and the new courts began hearing cases on Sept. 1, 2024, after judges were appointed to five initial divisions covering Dallas, Fort Worth, Houston, Austin, and San Antonio.
Senate Bill 29 codified the business judgment rule protecting corporate directors from certain liabilities in litigation in the Business Court. A separate measure, Senate Bill 1057, allows companies to impose higher ownership and solicitation thresholds on some shareholder proposals, further limiting shareholder litigation leverage, according to corporate-governance research.
Grewal also cited governance flexibility and legal predictability as reasons for Coinbase reincorporating in Texas. He contrasted such Texas corporate-law reforms with what he described as unpredictable outcomes in Delaware’s Chancery Court.
The Texas Blockchain Council—a Dallas-based trade association that works on policy, regulation, and business development to make Texas a leading jurisdiction for digital assets—publicly welcomed Coinbase’s move on X, calling it a “strong signal that Texas is now the hub of digital-asset innovation.” The group said it is “thrilled to have them back as part of our growing community of builders and advocates.”
DExit: New reincorporation data show the trend is real
Delaware reported that 81.4% of U.S. initial public offerings in 2024 chose the state, and that it has more than 2.1 million business entities on its rolls—including roughly two-thirds of all Fortune 500 companies—according to its most recent annual report.
But a recent report on the Harvard Law School Forum on Corporate Governance found that “interest in reincorporation away from Delaware has increased” since Musk’s compensation package was struck down, and concluded that new data seem to “support the hype,” according to the authors.
Their review of SEC filings for larger public companies found that Delaware experienced a net loss of 11 large public companies through reincorporation in the period after the Musk ruling, reversing a prior trend in which the state had gained firms, the analysis said.
Nevada has shown early gains. Companies reincorporating there include Roblox, Dropbox, TripAdvisor, and venture firm Andreessen Horowitz—an early Coinbase backer.
And in addition to Tesla and SpaceX, Texas has begun to register gains of its own: Department store chain Dillard’s secured shareholder approval this summer to convert from a Delaware corporation to a Texas corporation.
Even so, reincorporations are largely about governance and litigation risk. They can be meaningful for state coffers, but don’t necessarily translate into new headquarters or local payrolls. Coinbase, for example, continues to operate as a remote-first company with no single official headquarters.
Grewal wrote that incorporation fees have generated more than $1 billion a year for Delaware. He suggested that Texas could eventually capture similar revenue if DExit continues, but added that it will take time for any rival state to approach Delaware’s scale.
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