A joint committee of the U.S. Uniform Law Commission (ULC) and the American Law Institute (ALI) finalized amendments to the Uniform Commercial Code (UCC), regulating the specifics of digital asset transactions and cryptocurrency-secured financing .
amendments “are recommended for enactment in all states,” although each final application case may vary depending on each one.
The final draft of the amendments of the Committee on Emerging Technologies of the ULC-ALI was approved during a meeting held from July 8 to 13. Key updates for the crypto industry appeared in articles 3 and 9, the new version of article 12 contains a set of relevant details as well.
The amendments introduce a concept of “controllable electronic records”, which would cover not only the current asset backed by a blockchain network, but also all future types of digital assets. By defining itself as a “record stored on an electronic medium”, controllable electronic ledgers incorporate cryptocurrencies and non-fungible tokens (NFTs), but are separated from the “electronic money” category.
In the “electronic money” is included in the revised category of “money” and means current digital currencies. In this sense, digital currencies issued by central banks (CBDC) could be considered “electronic money” under the new guidelines, while cryptocurrencies could not.
As JD Supra analysts noted, in a practical sense this differentiation means that “perfection of a security interest in a CBDC can only be achieved through the lender’s ‘control’ of the CBDC.” The amendments also specify that to be perfected in first priority in cryptocurrency collateral, a lender will have to acquire the private key of its borrower and transfer the cryptocurrency to a wallet that the lender (or custodian) exclusively controls.
The ETC was formed under the ULC in 2019 to address legal issues surrounding cryptocurrencies, NFTs, and other emerging digital assets. The UCC is a set of model laws adopted in their entirety by nearly every region of the United States to facilitate interstate commerce. Therefore, the changes are likely to be accepted throughout the country over time.
In March 2022, the New Hampshire House of Representatives passed a bill to adopt the new version of Chapter 12 of the UCC, that will govern transfers of digital assets.
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