Why Should Delaware Care?
Delaware’s governor and his allies in the legislature unveiled a proposal to adopt a new set of banking reforms. The legislation places Delaware in a race with other states to attract a burgeoning, and potentially fast-growing, industry. Still unclear is whether it could thrust Delaware and its regulators – who pride themselves on a business-friendly ethos – into a debate between financial titans.
With two bills introduced Monday, Delaware could be among the first states to regulate a part of the disruptive cryptocurrency industry that is pushing to become a mainstream provider of card payments and savings accounts.
And, unlike in Congress where a bitter fight is raging over rules to govern the industry, Delaware’s proposal may avoid a lobbying clash between cryptocurrency firms and traditional banks.
The state’s proposal would create regulations allowing Delaware’s banking commissioner to issue licenses to cryptocurrency companies that take deposits and hold them in the form of stablecoins – which are digital currencies pegged to the dollar.
The proposed rules build on efforts by lawmakers nationally, and in a handful of other states to formalize the cryptocurrency industry within the American financial system. Supporters say that could unlock massive flows of money to the industry and therefore democratize financial tools for everyday people.
But critics argue it could boost a shadowy industry that too often facilitates money laundering and tax evasion.
For Delaware, proponents hope the legislation will bolster the state’s reputation as a financial technology center.
In a press conference at the University of Delaware on Monday, Gov. Matt Meyer said the regulations, if passed, could become as consequential to the state as its 1980s-era financial reforms that convinced credit card company executives to move thousands of jobs to the Wilmington area.
Meyer said changes in technology since then have required the state to reform banking laws to make room for cryptocurrencies. In a reference to a rise in virtual payments, Meyer said that few people will “carry a piece of plastic in their wallet” in the future.
“While that creates a tremendous opportunity for many in the market, it also creates a threat to our state, to a bedrock industry in our state,” Meyer said.
Also speaking at the press conference — held at UD’s FinTech Innovation Hub — was Karyn Polak, president of the Delaware Bankers Association, who said she was proud to stand alongside Delaware officials pushing for the “critically important” reforms.
“The financial landscape of today … looks very different from the environment that shaped our current statutes decades ago,” Polak said.
Her comments were noteworthy because banks have ferociously opposed other draft legislation in front of Congress that they say would allow cryptocurrency companies to encroach on their business.
A parallel fight in Congress
The key issue in those federal fights has centered around the question of whether stablecoin issuers should be able to pay their depositors a form of interest-like “rewards.”
Pushing to make those legal – and in opposition to the banks – is Coinbase, one of the largest cryptocurrency trading platforms in the world. The company also is a primary investor in the stablecoin issuer, Circle.
Unlike other forms of cryptocurrencies with volatile valuations, stablecoins are designed to be safer forms of everyday payments because their values are tied to traditional currencies, largely the United States dollar. Crypto companies maintain those dollar pegs by investing customer deposits into safe securities, such as U.S. Treasury bills.
Last summer, Congress prohibited stablecoin companies from offering interest to customers through legislation, called the GENIUS Act. President Donald Trump promptly signed the act into law.
But that legislation didn’t end the fight. Earlier this month, Trump joined the crypto industry to criticize banks for lobbying against new legislation, known as the CLARITY Act, that could allow stablecoin companies to pay yields to people who use their accounts.
In a post on Truth Social, Trump claimed that “Americans should earn more money on their money.”
“The Banks are hitting record profits, and we are not going to allow them to undermine our powerful Crypto Agenda that will end up going to China,” Trump said in the post.
Following guidelines under the GENIUS Act, Delaware’s legislation states that “a permitted payment stablecoin issuer may not pay interest or yield on payment stablecoins to holders.”
It further says that if the federal government allows those interest-like payments in the future, then the state law would follow the new rules.
Who’s lobbying for the legislation?
Asked who has lobbied for the proposed legislation, Meyer said the idea for the reforms originated within his office.
He also noted that a sponsor of the bills, State Sen. Spiros Mantzavinos (D-Elsmere), brought “similar but not identical thoughts of updating our financial regulation.”
Pressed specifically about lobbying from Coinbase, the governor said he spoke with a company official a few months ago, but that conversation was about Coinbase’s decision at the time to move its legal headquarters out of Delaware.
“I made it very clear that I thought they were taking actions that were not in Delaware’s interests,” Meyer said.
When asked about potential pushback from Delaware banks, Meyer asserted that his goal is to protect families, grow jobs, and democratize finance.
“Those are my three guiding principles. Who lobbies or calls or happens to sneak through a door and get a word into me edgewise doesn’t really matter,” Meyer said.
As of Tuesday, Delaware’s database of lobbying activity lists no registered lobbyists as working on the stablecoin legislation.
Mantzavinos said in an interview with Spotlight Delaware that he began thinking about the legislation in 2024 while watching Discover – the last of the independent credit card companies that came to Delaware in the 1980s – be purchased by Capital One.
Mantzavinos said ideas about the legislation formed more fully last year after Congress passed the GENIUS Act.
At the time, he said he watched as other states make “moves in this space,” which prompted his work on what he described as a more measured set of rules for the industry. Notably, Wyoming, a state that has aimed to compete with Delaware in the financial space in the past, became the first to issue a stablecoin earlier this year.
“We started to get a sense of seeing where some states were getting out over their skis a little bit, and being like, ‘That’s not us, that’s not Delaware,’” he said.