The Delaware Banking Modernization Act under Senate Bill 16 was introduced March 23, making changes related to digital assets and bank operations.

Sponsored by Sen. Spiro Mantzavinos, D-Hockessin, with support from Sen. Brian Pettyjohn, R-Georgetown, the bill defines a digital asset as any digital representation of value recorded on a cryptographically secured distributed ledger or similar technology, including virtual currency.

Virtual currency is defined as a digital representation of value used as a medium of exchange, unit of account or store of value that is not money and is not denominated in money. The bill excludes loyalty or rewards program credits that cannot be exchanged for money or bank credit, and digital representations of value issued by a publisher and used solely within an online game or game platform. 

The bill also adds digital assets to a personal property in a fiduciary capacity managed by a bank; makes changes to the way national banks or federal savings associations are converted to state banks; and allows a Delaware state trust company, with prior written approval of the state bank commissioner, to establish, maintain and operate branch offices, trust offices or other places of business in other states pursuant to an interstate merger or conversion transaction in which the Delaware state trust company is the resulting entity.

SB 19, also sponsored by Mantzavinos and Pettyjohn, would create a licensing framework for payment stablecoin issuers and digital asset service providers operating with or on behalf of Delaware residents.

More legislation under a Delaware Money Transmission & Virtual Currency Modernization Act will be filed in the coming days, officials said. 

The act is based on model legislation from the Conference of State Bank Supervisors Money Transmission Model Act, and would:

• Ensure states can coordinate in all areas of regulation, licensing and supervision to eliminate unnecessary regulatory burden and more effectively utilize regulator resources
• Implement consumer protection mechanisms to prevent financial crime
• Standardize the types of activities that are subject to licensing or otherwise exempt from licensing
• Modernize safety and soundness requirements to ensure customer funds are protected in an environment that supports innovative and competitive business practices.