MANTZAVINOS, BUSH INTRODUCE BANKING MODERNIZATION LEGISLATION

The following information was released by Delaware Senate Democrats:

Following a press conference Monday morning with leaders from Delaware's financial sector,Sen. Spiros MantzavinosandRep. Bill Bushfiled legislation to modernize Delaware's banking laws while safeguarding consumers in today's rapidly-evolving financial landscape.

"In 1981, our predecessors in the General Assembly passed the Financial Center Development Act, paving the way for Delaware to become the 'credit card capital' of the nation. That was decades ago and much has changed in our financial sector in that time," saidSen. Mantzavinos, chair of the Senate Banking, Business, Insurance and Technology Committee. "Modernizing Delaware's banking code is long overdue. With this package of legislation, we're not vastly changing our identity in the financial sector, but we're continuing the tradition that made us successful in the first place."

In the years following the passage of the Financial Center Development Act, Delaware gained thousands of new jobs in the finance sector. Today, the financial sector accounts for roughly 9% of Delaware's jobs, which is nearly double the national average.

"Our administration is focused on attracting the jobs of the future to the First State, and that includes continuing to foster an innovative banking ecosystem that will open doors not just for workers and companies, but for every single person who participates in our economy," saidGovernor Matt Meyer. "This legislative package sends a signal loud and clear: here in Delaware, we're democratizing our financial services and lowering the barriers to entry, making it easier for all residents to send, receive and save money with just an internet connection. Thank you to Sen. Mantzavinos and Rep. Bush for your leadership in the General Assembly, and for making today's announcement possible.

The press conference took place at the Center for Accelerating Financial Equity, located at the FinTech Innovation Hub on the University of Delaware's STAR Campus.

"At UD, our fintech mission is to ensure that everyone has the tools, knowledge and access to build stable futures for themselves and their families," saidUniversity of Delaware President Laura Carlson."We're engaged in pioneering fintech research and exploring a future pilot program to use stablecoin on campus innovations that are only possible because of the creative fintech ecosystem we're cultivating on campus and with our community partners."

Senate Bill 16, also known as the Delaware Banking Modernization Act, is the first major revision to Title 5 of the Delaware Code since the 1981 passage of the Financial Center Development Act. SB 16 updates Delaware Code by defining digital assets, expanding the State Bank Commissioner's authority, modernizing corporate governance and organizational requirements for state-chartered banks and trust companies, facilitating interstate trust company operations and conversions, and expanding the authority of out-of-state financial institutions to act as fiduciaries in Delaware.

It's been more than four decades since we've made any meaningful updates to our state's banking laws, and in that time, the way people bank and conduct transactions has changed significantly," saidRep. Bush, chair of the House Economic Development/Banking/Insurance and Commerce Committee. "We need to make sure our laws are keeping up with those changes. These bills help us do just that by modernizing our system while reinforcing strong protections for consumers. I want to thank Sen. Mantzavinos for his leadership on this effort."

Additional legislation called the Delaware Money Transmission and Virtual Currency Modernization Act will be filed in the coming days. It is based on model legislation from the Conference of State Bank Supervisors (CSBS) Money Transmission Model Act, and is designed to replace existing state money transmission laws in the following ways:

Ensures states can coordinate in all areas of regulation, licensing, and supervision to eliminate unnecessary regulatory burden and more effectively utilize regulator resources

Implements consumer protection mechanisms to prevent financial crime

Standardizes the types of activities that are subject to licensing or otherwise exempt from licensing

Modernizes safety and soundness requirements to ensure customer funds are protected in an environment that supports innovative and competitive business practices.

"Financial services are evolving at a pace that would have been difficult to imagine a decade ago. New technologies, new payment systems, and new financial products are reshaping how consumers move money, access financial services, and interact with the broader economy," saidLisa Collison,Delaware State Bank Commissioner."As the state regulatory authority for financial services, our responsibility is to ensure that the legal frameworks governing these services evolve as well."

Senate Bill 19, also known as the Delaware Payment Stablecoin Act, creates a licensing framework for payment stablecoin issuers and digital asset service providers operating with or on behalf of Delaware residents. Language in SB 19 adopts definitions drawn from the federal Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), and other federal models.

If adopted, SB 19 would establish reserve requirements including reserve shortfall remediation cascades, mandatory redemption timing standards, capital standards, anti-money laundering obligations, data privacy statutory floors, change-in-control notice procedures, custody safeguards, a federal-to-state charter conversion pathway, and strong preemption provisions. The State Bank Commissioner would be directed to promulgate implementing regulations within specified timeframes to align Delaware's framework with evolving federal standards.

"Taken together, these changes reflect exactly the kind of thoughtful modernization our members have been asking for," saidKaryn Polak, President of the Delaware Bankers Association. "Not a wholesale reinvention. Not deregulation for its own sake. But a careful, deliberate upgrade that says: Delaware sees where the industry is going and we're ready."

The bills have been assigned to the Senate Banking, Business, Insurance and Technology Committee.