Disrupt Delaware! (Elon Musk)
Posted February 07, 2024
A little over a week ago, Musk said this on the X-bird app:
In case you’re not up to speed…
Here’s the TLDR:
2018: Musk and Tesla's board agree on a compensation package based on achieving specific (and wild) milestones, approved by shareholders.
Post-2018: Musk achieves these milestones, qualifying for a compensation of about $50-55 billion in stock options at 2018 prices.
2024: A Delaware court rules against Musk in a lawsuit brought by a shareholder with a minimal stake in Tesla (nine shares!), challenging his compensation package.
According to the Delaware Division of Corporations…
67.8% of Fortune 500 companies are incorporated in Delaware, and around 1.5 million corporations have registered in the state.
In the past week, however, several big tech influences have announced they’re moving out.
Many have considered Nevada and Texas.
But perhaps they should consider… and hear me out on this… Native American tribal land in the Carolinas.
Let me explain.
Catawba Digital Economic Zone
It’s called the Catawba Digital Economic Zone (CDEZ).
I had breakfast with the CEO, Joe McKinney, about a week ago here in Vitalia, a pop-up city in Prospera, Honduras.
Formed in February 2022 by the Catawba Indian Nation, the CDEZ isn’t unlike Estonia’s e-residency program e-estonia.
Many people don’t know this:
Under the U.S. Constitution, tribal governments have the same status as states when it comes to commercial law and business regulations.
Thus, the Catawba have the right to establish an independent commercial code as a sovereign nation.
Special Economic Zones (SEZs), as they’re also called, usually leverage tax incentives to attract business.
But it’s the tribe’s position as a sovereign entity that makes the CDEZ all the more interesting.
In the US, tribes have the authority to create their own governments, enact and apply laws, tax, define their membership, regulate activities, manage zoning, and restrict access to their lands.
Turns out, they can also create their own regulatory environments for nascent (and established) digital, fintech, and blockchain companies.
Jurisdictional arbitrage at its finest.
“Our tagline,” Joe said, “is simple: Disrupt Delaware.”
It remains to be seen how much protection Catawba can offer to crypto companies in the US…
The Catawba Digital Economic Zone does look promising. And, depending on your needs, it could be a good choice if you’re looking to exit Delaware.
(Check out their website right here.)
The Future of Governance is Here
In case you haven’t noticed…
Small, sovereign nations such as Liechtenstein, Estonia, Singapore, and Dubai have been thriving.
The reasons are too simple. Therefore, the academics can’t fathom it:
They are agile, have embraced classically liberal economic policies, and view themselves as startups in competition with larger countries.
With the rise of special economic zones, we’re going to see an even more interesting dynamic play out.
While we’re keeping a close eye on Catawba…
Here in Honduras, Próspera is one of the most advanced special economic zone hubs in the world.
They have thousands of members and over 100 companies in operation under their jurisdictional umbrella.
Better yet, they’re leapfrogging traditional finance.
Not only has Prospera recognized Bitcoin as an official unit of account…
(I paid for my residency, meals, and accommodation with crypto)...
The SEZ recently initiated a $100 million security token offering, allowing accredited investors to make fractional investments in Próspera real estate.
But, that’s not what makes Prospera truly special…
Próspera is hacking at the root of our ills the world over. The one thing that should unite us, no matter the borders inside which we live: poor governance.
Now, here’s my bold prediction:
By providing sound governance and competition with traditional forms of money (coupled with the rise of AI and other exponential technologies, of course)…
Special economic zones have the potential to unleash more human ingenuity and innovation in the next 20 years than America did in the past century.
Bold bet? Perhaps.
But, as I sit here in Honduras, watching history unfold, it's one I'm willing to champion.