Delaware Banking Modernization Act of 2026 Expands Digital Asset Authority and Modernizes Banking Laws

The Delaware Banking Modernization Act of 2026 (Senate Bill 16) was approved by the Delaware General Assembly on June 18, 2026, and signed into law by Governor Matt Meyer on July 6, 2026. The legislation modernizes Delaware’s Banking Code through a series of updates affecting digital assets, trust company operations, interstate banking and corporate governance for Delaware-chartered financial institutions.

Digital Assets and Virtual Currency

A significant feature of the Act is its recognition of digital assets and virtual currency within the Delaware Banking Code. The legislation adds definitions for both terms and confirms that digital assets constitute personal property for fiduciary purposes. As a result, Delaware state-chartered banks and trust companies are expressly authorized to hold, safeguard, and administer digital assets and virtual currencies on behalf of clients in fiduciary capacities.

The Act 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 neither money nor denominated in money. The definition excludes loyalty or rewards program credits that cannot be exchanged for money or bank credit, as well as digital assets used exclusively within online games or gaming platforms.

Removal of Competitive Restrictions on Limited Purpose Trust Companies

The Act also removes a longstanding restriction applicable to Delaware limited purpose trust companies that prohibited them from competing with Delaware banks and trust companies for in-state business. Eliminating this provision is intended to ease the regulatory and operational burdens that limited purpose trust companies have historically faced and encourage the establishment, growth and continued operation of limited purpose trust companies in Delaware.

Although the statutory amendment became effective upon enactment, implementation will occur on the earlier of one year after enactment or the date the State Bank Commissioner announces that final implementing regulations have been adopted.

Expanded Interstate Fiduciary Authority

The Act further facilitates interstate fiduciary operations by expanding the authority of out-of-state financial institutions to serve in fiduciary roles under Delaware law. Subject to reciprocity, non-Delaware state-chartered banks and trust companies may now be appointed as trustees, executors, guardians and other fiduciaries under instruments governed by Delaware law and may exercise those fiduciary powers within Delaware.

This authority is conditioned on the institution’s home state providing equivalent fiduciary rights to Delaware state-chartered banks and trust companies, reflecting a reciprocal approach to interstate trust administration.

Additional Modernization Measures

Beyond these headline changes, the Act includes numerous amendments designed to modernize Delaware’s Banking Code. Among other reforms, the legislation:

• Expands the State Bank Commissioner’s authority to engage specialized legal, technical and consulting expertise.
• Authorizes the chartering of banks and trust companies with limited or specialized powers, subject to regulatory approval.
• Modernizes corporate governance requirements by providing greater flexibility in determining board composition and organizational documents.
• Streamlines interstate mergers, conversions, and branch operations involving Delaware-chartered banks and trust companies.
• Clarifies that fiduciary appointments automatically vest in successor institutions following certain mergers and conversions, reducing administrative burdens while preserving judicial oversight where appropriate.

Takeaway

The Delaware Banking Modernization Act of 2026 reinforces Delaware’s position as a leading jurisdiction for banking and trust company regulation. By expressly recognizing digital assets, eliminating barriers to competition for limited purpose trust companies, facilitating interstate fiduciary services, and updating organizational and regulatory frameworks, the Act reflects the state’s continued efforts to modernize its banking laws in response to evolving financial services and digital asset markets.