A package of bills to modernize Delaware’s banking laws pass the House with bipartisan support: SB 16, SB 19, and SB 18.
State Senator Spiros Mantzavinos (D-Elsmere) introduced the bills back in March with the support of Governor Matt Meyer, and now they head to his desk for signature.
The legislative package is considered the first significant change to the First State’s banking laws since 1981's Financial Center Development Act. Among other provisions to encourage banks to establish subsidiaries in Delaware, the 1981 legislation placed a regressive income tax on banks and elimination of interest rate ceilings on consumer transactions.
Back in March, Meyer said Delaware’s regulatory structure, “has not kept up” and the state needs policy appropriate for the challenges that come with a banking industry, “that expects fewer people will carry a piece of plastic in their wallet at all.”
He called this an opportunity and a threat to a “bedrock industry” for the state.
Respectively, senate bills 16,18, and 19 are known as the Delaware Banking Modernization Act, the Delaware Money and Transmission and Virtual Currency Modernization Act, and the Delaware Payment Stable Coin Act.
The first of these, Senate Bill16, creates definitions in Delaware code for digital asset and virtual currency.” It broadens scope on interstate mergers and conversions for trust companies, along with out-of-state activity. It grants Delaware banks authority to hold and manage digital assets on behalf of its clients.
This arm of the banking update also expands the State Bank Commissioner’s authority to operate in an increasingly digital money market.
The House co-sponsor for the legislation, Bill Bush (D- Dover), said Senate bill 19, “creates a licensing framework for payment stable coin issuers and digital asset service providers.”
The regulatory guidance, “operating with or on behalf of Delaware residents,” aligns with the federal Genius Act, passed last year.
Stablecoins are digital money pegged to the value of another assets, like the U.S. dollar. Mantzavinos’s bill works with the updated definitions from SB 16 to establish clarity on how stable coin issuers should operate within the First State, requiring issuers to get a license with the state’s bank commissioner. And it sets the level of reserve requirements for issuers at a 1:1 ratio, like the Genius Act. Since passage of the Genius Act, different arms of the federal government have coordinated to set up relevant procedures and standards to support the new rules. Mantzavinos said he left SB 19 flexible, to incorporate these developments.
The package’s SB 18 comes from policy drafted by the Conference of State Bank Supervisors, which has been passed in at least 30 other states. While SB 19 regulates stable coin, SB 18 applies Delaware law to money transmitters, like PayPal, and crypto-businesses. It nationalizes standards and resources for money transmitters. And it assures protections to users in Delaware related to timeliness of transfers and refunds.
The package received bipartisan support in the General Assembly. Upon governor signature, some pieces of SB 16 will take effect “immediately.” Others will be implemented upon issuance of rules from the state bank commissioner. SB 19’s implementation will be more gradual, as the state incorporates directives from the Genius Act. And SB 18 goes into effect a year after it’s passed, or when the commissioner’s office is finished setting procedures for its enforcement.
