A column from the New York Law Journal delves into the scope of UCC Article 9 with a focus on virtual currencies. The piece touches upon the continuing efforts of The American Law Institute and the Uniform Law Commission to update the Uniform Commercial Code in this ever-changing commercial world.
Excerpted from the article:
Virtual currencies continue to gain acceptance in commercial transactions. As a result, financial institutions are beginning to accept such currencies as collateral for financings. However, Article 9 of the Uniform Commercial Code (UCC) falls short of providing adequate guidance on how to create or perfect a security interest in these currencies. This uncertainty, and the consequent risks to lenders, are further exacerbated by the lack of helpful case law and non-uniform state laws. Recognizing this problem, the Uniform Law Commission and The American Law Institute in 2019 organized the Uniform Commercial Code and Emerging Technologies Committee (the Committee) to consider changes to the UCC intended primarily to address “digital assets” (a term used but not defined by the Code drafters), such as some virtual currencies. This article examines the scope of UCC Article 9 with a focus on virtual currencies, taking into consideration issues of classification and perfection, but also how the Committee is attempting to tackle these unsettled issues by modifying existing provisions and, in some cases, adding new ones.
The full article is available here [subscription required].