AN ACT TO AMEND TITLE 5 OF THE DELAWARE CODE RELATING TO MONEY TRANSMISSION.

Plain English Breakdown

The exact date the new rules will take effect is dependent on either one year after enactment or a notice from the State Banking Commissioner.

Delaware Money Transmission and Virtual Currency Modernization Act

This act updates Delaware's laws about money transmission to include virtual currency and sets new rules for how companies must handle both traditional and digital money.

What This Bill Does

• Replaces the existing Chapter 23 of Title 5 with the 'Delaware Money Transmission and Virtual Currency Modernization Act'.
• Allows the State Bank Commissioner to coordinate with other states on licensing and supervising money transmitters using a shared system called NMLS.
• Establishes new safety standards for companies that handle money, including requirements based on how much money they manage.
• Standardizes receipt requirements for both traditional and virtual currency transactions.
• Provides a 10-day refund window for certain types of money transfers.

Who It Names or Affects

• Money transmitters who operate in Delaware
• People using money transfer services in Delaware

Terms To Know

Virtual Currency

Digital or electronic currency that can be used as a medium of exchange, such as Bitcoin.

NMLS System

A system used by states to manage the licensing and supervision of financial services companies.

Limits and Unknowns

• The exact date when the new rules will take effect depends on either one year after the act is passed or a notice from the State Banking Commissioner.
• It requires more than half but less than two-thirds support in both houses to pass.

Official Summary Text

AN ACT TO AMEND TITLE 5 OF THE DELAWARE CODE RELATING TO MONEY TRANSMISSION.
This Act repeals the existing Chapter 23 of Title 5 and replaces it with the “Delaware Money Transmission and Virtual Currency Modernization Act.” This Act modernizes the State’s regulatory framework for money transmission and addresses the emergence of virtual currency. The Act allows the State Bank Commissioner to coordinate with other states in the licensing and supervision of money transmitters, utilizing the NMLS system. The Act establishes new safety and soundness standards, including a tiered net worth requirement based on total assets and updates surety bond requirements scaled to a licensee’s average daily money transmission liability.

The Act standardizes receipt requirements for both fiat and virtual currency transactions, provides a 10-day refund window for certain transmissions, and establishes specific disclosure rules for payroll processing services. This Act provides a 6-month window for general compliance and a 1-year period for licensees to meet new net worth and permissible investment standards.

This Act creates new regulatory framework for virtual currency business activity. It defines virtual currency and virtual currency business activity. It mandates specific consumer disclosures regarding the risks of virtual currency and establishes that virtual currency held by a licensee is a pro rata property interest not subject to the claims of the licensee’s creditors.

The Act allows the Commissioner to adopt rules and regulations for the administration of this chapter. The Act is to be implemented the earlier of 1 year from the date of the Act’s enactment or notice from the State Banking Commissioner that final regulations have been promulgated.

This Act requires a greater than majority vote for passage because § 1 of Article IX of the Delaware Constitution requires the affirmative vote of two-thirds of the members elected to each house of the General Assembly to amend the general corporation law.