This chapter may be cited as the “Delaware Money Transmission and Virtual Currency Modernization Act.”

5 Del. C. 1953, §  2301;  58 Del. Laws, c. 421;  85 Del. Laws, c. 338, § 2; 

It is the intent and purpose of the General Assembly that the provisions of this chapter accomplish the following:

(1) Ensure states can coordinate in all areas of regulation, licensing, and supervision to eliminate unnecessary regulatory burden and more effectively utilize regulator resources.

(2) Protect the public from financial crime.

(3) Standardize the types of activities that are subject to licensing or otherwise exempt from licensing.

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

85 Del. Laws, c. 338, § 2; 

As used in this chapter:

(1) “Acting in concert” means persons knowingly acting together with a common goal of jointly acquiring control of a licensee whether or not pursuant to an express agreement.

(2) “Authorized delegate” means a person a licensee designates to engage in money transmission on behalf of the licensee.

(3) “Average daily money transmission liability” means the amount of the licensee’s outstanding money transmission obligations in this State at the end of each day in a given period of time, added together, and divided by the total number of days in the given period of time. For purposes of calculating average daily money transmission liability under this chapter for any licensee required to do so, the given period of time shall be the quarters ending March 31, June 30, September 30, and December 31.

(4) “Bank Secrecy Act” means the Bank Secrecy Act, 31 U.S.C. § 5311, et seq. and its implementing regulations, as amended and recodified from time to time.

(5) “Closed loop stored value” means stored value that is redeemable by the issuer only for goods or services provided by the issuer or its affiliate or franchisees of the issuer or its affiliate, except to the extent required by applicable law to be redeemable in cash for its cash value.

(6) “Commissioner” means the State Bank Commissioner.

(7) “Control” means any of the following:

a. The power to vote, directly or indirectly, at least 25% of the outstanding voting shares or voting interests of a licensee or person in control of a licensee.

b. The power to elect or appoint a majority of key individuals or executive officers, managers, directors, trustees, or other persons exercising managerial authority of a person in control of a licensee.

c. The power to exercise, directly or indirectly, a controlling influence over the management or policies of a licensee or person in control of a licensee.

(8) “Eligible rating” means a credit rating of any of the 3 highest rating categories provided by an eligible rating service, whereby each category may include rating category modifiers such as “plus” or “minus” for Standard and Poor’s (S&P) or the equivalent for any other eligible rating service. Long-term credit ratings are deemed eligible if the rating is equal to A- or higher by S&P, or the equivalent from any other eligible rating service. Short-term credit ratings are deemed eligible if the rating is equal to or higher than A-2 or SP-2 by S&P, or the equivalent from any other eligible rating service. In the event that ratings differ among eligible rating services, the highest rating shall apply when determining whether a security bears an eligible rating.

(9) “Eligible rating service” means any Nationally Recognized Statistical Rating Organization (NRSRO) as defined by the U.S. Securities and Exchange Commission, and any other organization designated by the Commissioner by rule or order.

(10) “Federally insured depository financial institution” means a bank, credit union, savings and loan association, trust company, savings association, savings bank, industrial bank, or industrial loan company organized under the laws of the United States or any state of the United States, when such bank, credit union, savings and loan association, trust company, savings association, savings bank, industrial bank, or industrial loan company has federally insured deposits.

(11) “In this State” means at a physical location within this State for a transaction requested in person. For a transaction requested electronically or by phone, the provider of money transmission may determine if the person requesting the transaction is “in this State” by relying on other information provided by the person regarding the location of the individual’s residential address or a business entity’s principal place of business or other physical address location, and any records associated with the person that the provider of money transmission may have that indicate such location, including but not limited to an address associated with an account.

(12) “Individual” means a natural person.

(13) “Key individual” means any individual ultimately responsible for establishing or directing policies and procedures of the licensee, such as an executive officer, manager, director, or trustee.

(14) “Licensee” means a person licensed under this chapter.

(15) “Material litigation” means litigation, that according to United States generally accepted accounting principles, is significant to a person’s financial health and would be required to be disclosed in the person’s annual audited financial statements, report to shareholders, or similar records.

(16) “Monetary value” means a medium of exchange, whether or not redeemable in money.

(17) “Money” means a medium of exchange that is authorized or adopted by the United States or a foreign government. The term includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more governments.

(18) a. “Money transmission” means any of the following:

1. Selling or issuing payment instruments to a person located in this State.

2. Selling or issuing stored value to a person located in this State.

3. Receiving money for transmission from a person located in this State.

b. “Money transmission” includes payroll processing services.

c. “Money transmission” does not include the provision solely of online or telecommunications services or network access.

(19) “MSB accredited state” means a state agency that is accredited by the Conference of State Bank Supervisors and Money Transmitter Regulators Association for money transmission licensing and supervision.

(20) “Multistate licensing process” means any agreement entered into by and among state regulators relating to coordinated processing of applications for money transmission licenses, applications for the acquisition of control of a licensee, control determinations, or notice and information requirements for a change of key individuals.

(21) “NMLS” means the Nationwide Multistate Licensing System and Registry developed by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators and owned and operated by the State Regulatory Registry, limited liability company, or any successor or affiliated entity, for the licensing and registration of persons in financial services industries.

(22) a. “Outstanding money transmission obligations” means any of the following:

1. Any payment instrument or stored value issued or sold by the licensee to a person located in the United States or reported as sold by an authorized delegate of the licensee to a person that is located in the United States that has not yet been paid or refunded by or for the licensee, or escheated in accordance with applicable abandoned property laws.

2. Any money received for transmission by the licensee or an authorized delegate in the United States from a person located in the United States that has not been received by the payee or refunded to the sender, or escheated in accordance with applicable abandoned property laws.

b. For purposes of paragraph (22)a. of this section, “in the United States” includes, to the extent applicable, a person in any state, territory, or possession of the United States; the District of Columbia; the Commonwealth of Puerto Rico; or a U.S. military installation that is located in a foreign country.

(23) “Passive investor” means any of the following:

a. A person that does not have the power to elect a majority of key individuals or executive officers, managers, directors, trustees, or other persons exercising managerial authority of a person in control of a licensee.

b. A person that is not employed by and does not have any managerial duties of the licensee or person in control of a licensee.

c. A person that does not have the power to exercise, directly or indirectly, a controlling influence over the management or policies of a licensee or person in control of a licensee and does 1 of the following:

1. Attests to paragraphs (23)a. through c. of this section in a form and in a medium prescribed by the Commissioner.

2. Commits to the passivity characteristics of paragraphs (23)a. through c. of this section, in a written document.

(24) a. “Payment instrument” means a written or electronic check, draft, money order, traveler’s check, or other written or electronic instrument for the transmission or payment of money or monetary value, whether or not negotiable.

b. “Payment instrument” does not include stored value or any instrument that is any of the following:

1. Redeemable by the issuer only for goods or services provided by the issuer or its affiliate or franchisees of the issuer or its affiliate, except to the extent required by applicable law to be redeemable in cash for its cash value.

2. Sold to the public but issued and distributed as part of a loyalty, rewards, or promotional program.

(25) a. “Payroll processing services” means receiving money for transmission pursuant to a contract with a person to deliver wages or salaries, make payment of payroll taxes to state and federal agencies, make payments relating to employee benefit plans, or make distributions of other authorized deductions from wages or salaries.

b. “Payroll processing services” does not include any of the following:

1. An employer performing payroll processing services on its own behalf, on behalf of its affiliate, or a professional employment organization subject to regulation under other applicable state law.

2. A person designated as an agent of a payor for the purpose of providing payroll processing services for which the agent would otherwise need to be licensed under this chapter, if all of the following apply:

A. There is a written agreement between the payor and the agent that directs the agent to provide payroll services on the payor’s behalf.

B. The payor holds the agent out to employees and other payees as providing payroll processing services on the payor’s behalf.

C. The payor’s obligation to a payee, including an employee or another party entitled to receive funds via the payroll processing services provided by the agent, is not extinguished if the agent fails to remit the funds to the payee.

(26) “Person” means any individual, general partnership, limited partnership, limited liability company, corporation, trust, association, joint stock corporation, or other corporate entity identified by the Commissioner.

(27) “Receiving money for transmission” or “money received for transmission” means receiving money or monetary value in the United States for transmission within or outside the United States by electronic or other means.

(28) “Remit” means to make direct payments of money to a licensee or its representative authorized to receive money or to deposit money in a bank in an account specified by the licensee.

(29) a. “Stored value” means monetary value representing a claim against the issuer evidenced by an electronic or digital record, and that is intended and accepted for use as a means of redemption for money or monetary value, or payment for goods or services. “Stored value” includes “prepaid access” as defined by 31 C.F.R. § 1010.100, as amended or recodified from time to time.

b. The term “stored value” does not include a payment instrument or closed loop stored value, or stored value not sold to the public but issued and distributed as part of a loyalty, rewards, or promotional program.

(30) “Streamlined acquisition of control” means a specialized, accelerated regulatory process that allows a person or entity to acquire control of a regulated business without undergoing the full, standard application and review procedures, provided that person or entity meets specific eligibility criteria, such as having previously complied with the regulatory authority.

(31) “Tangible net worth” means the aggregate assets of a licensee excluding all intangible assets, less liabilities, as determined in accordance with United States generally accepted accounting principles.

58 Del. Laws, c. 421;  71 Del. Laws, c. 19, §  71;  84 Del. Laws, c. 42, § 72;  85 Del. Laws, c. 338, § 2;