Written By: Dawn McGill, Vice President and Senior Trust Officer

 

Status: Approved by the Delaware General Assembly on June 18, 2026, and currently awaiting signature by Governor Matt Meyer.

The Delaware Banking Modernization Act of 2026 (Senate Bill 16) introduces a broad set of updates to Delaware banking and trust company law. The legislation reflects the continued evolution of fiduciary services, interstate trust administration, and emerging asset classes, while providing additional flexibility for trust companies operating in and beyond Delaware.

Below are several developments that may be particularly relevant to trustees, trust companies, and fiduciary advisors.

Recognition of Digital Assets Within Delaware’s Fiduciary Framework

One of the most notable provisions of the Act is the formal recognition of digital assets and virtual currency within Delaware’s banking and trust statutes.

The legislation:

  • Defines a “Digital Asset” as a digital representation of value recorded on a cryptographically secured distributed ledger or similar technology, including virtual currency.
  • Defines “Virtual Currency” 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.
  • Excludes loyalty rewards programs and certain in-game digital assets that cannot be exchanged for money or bank credit.

The Act also clarifies that digital assets constitute personal property for fiduciary purposes. As a result, Delaware state-chartered banks, trust companies, and savings banks may hold, administer, and manage digital assets and virtual currencies on behalf of clients within a clearly defined statutory framework.

For trustees overseeing cryptocurrency and other blockchain-based assets, these provisions may provide additional certainty regarding fiduciary administration and custody.

Removal of Historical Competition Restrictions

The Act removes a longstanding restriction on Delaware limited purpose trust companies that required them to operate in a manner that would not substantially compete with existing Delaware banks and trust companies.

The change is expected to provide greater flexibility for new and existing trust company entrants and may support continued growth within Delaware’s trust industry.

Implementation of this provision will occur on the earlier of:

  • One year after enactment; or
  • Publication and promulgation of final regulations by the Delaware State Bank Commissioner.

Expanded Interstate Fiduciary Authority

The legislation also introduces reciprocity provisions that broaden opportunities for certain out-of-state institutions to serve in fiduciary capacities under Delaware law.

Subject to reciprocity requirements, qualifying out-of-state banks and trust companies may:

  • Be appointed as trustee, executor, guardian, or other fiduciary under Delaware-governed instruments; and
  • Exercise fiduciary powers within Delaware.

These provisions apply when the institution’s home state grants comparable fiduciary authority to Delaware-chartered banks and trust companies.

The reciprocity framework is intended to facilitate interstate fiduciary relationships while maintaining a level competitive environment for Delaware institutions.

Additional Trust Industry Developments

The Act includes several other provisions that may affect trust company operations and administration, including:

  • Facilitating interstate mergers, relocations, and conversions involving banks and trust companies.
  • Providing for automatic vesting of fiduciary appointments following approved mergers and conversions.
  • Expanding the ability of Delaware trust companies to establish and operate offices in other states.
  • Granting the State Bank Commissioner greater flexibility to approve institutions with specialized or limited powers and tailor regulatory requirements based on risk profiles.
  • Modernizing certain governance and organizational requirements applicable to Delaware-chartered banks and savings banks.

Looking Ahead

If signed into law, the Delaware Banking Modernization Act of 2026 would represent a meaningful modernization of Delaware’s banking and trust framework. The legislation addresses emerging areas such as digital asset administration, updates aspects of the state’s regulatory structure, and supports greater operational flexibility for trust companies engaged in interstate activities.

Taken together, these changes may further reinforce Delaware’s position as a leading jurisdiction for trust administration and fiduciary services while providing trustees and institutions with additional tools to meet evolving client needs.