2022 U.C.C. Revisions Unlock Digital Assets’ Potential

On December 5, 2025, Governor Kathy Hochul signed a bill¹ adopting the 2022 amendments to the Uniform Commercial Code recommended by the American Law Institute and the Uniform Law Commission (“2022 Revisions”).² These 2022 Revisions bring digital assets, including cryptocurrencies and other instruments based on blockchain technology, within the scope of the Uniform Commercial Code (“U.C.C.”),³ the nation’s primary body of commercial laws.

Legal developments at the federal level, including the GENIUS Act⁴ and regulatory guidance indicating that banks may engage in crypto-asset activities,⁵ have garnered attention. The 2022 Revisions, less so. Architects of financial products would be remiss to ignore them, however, because the 2022 Revisions provide the raw material with which to build an economy that fully integrates digital assets. The 2022 Revisions introduce entirely new financial assets; create the legal mechanism by which traditional financial instruments can leverage the blockchain and similar distributed ledger technologies; and offer the nascent digital asset market the legal certainty, predictability, and recourse that the U.C.C. has provided to traditional commercial and financial markets for decades.

Recent announcements of tokenized alternative investment products⁶ signal a market acceptance of blockchain technology and an appetite for financial instruments that take advantage of the efficiencies that the blockchain and related technologies offer. The 2022 Revisions offer the means by which blockchain technology can be coupled with established financial products. It is tempting to speculate how such a powerful combination could be put to use. One can imagine, to name a few possibilities, controllable electronic records tethered to limited partnership interests of private equity funds, rights to carried interest payments, or interests based on the outcome of protracted litigation.

The Controllable Electronic Record: A Versatile New Tool

Perhaps the most prominent of the 2022 Revisions is the creation of a new asset category: the controllable electronic record.⁷ This new concept, along with corresponding revisions to Articles 1 and 9, is “a major part of the effort to adapt the UCC to emerging technologies,” such as “distributed ledger technology . . . including blockchain technology.”⁸ Despite its simple definition (“a record stored in an electronic medium that can be subject to control”),⁹ the controllable electronic record is a versatile new tool at the disposal of designers of financial products. This versatility stems from the fact that it can be either a record that has “inherent value,” as is the case with bitcoin and other cryptocurrencies,¹⁰ or a record associated with another asset of value such as an account, payment intangible, or financial asset.¹¹

When associated or “tethered” to conventional financial instruments and assets, a controllable electronic record that is based on distributed ledger technology (or other innovative technologies) becomes the mechanism by which such technology can be brought to bear to enhance such conventional financial instruments and assets, some of which predate the computer age. In short, the controllable electronic record can link the automation, efficiency, and transparency of the blockchain with the legal certainty, predictability, and market acceptance of established financial products.

This was the express intention of the drafters of the 2022 Revisions. They offer examples of how controllable electronic records can be used as “tokens” to “facilitate transfers of the shares” of a corporation by treating the transfer of control thereof as “instructions to the . . . issuer for the transfer of registration of the share(s) represented by the token.”¹² They hasten to note, however, that, notwithstanding any efficiencies gained from tethering a traditional asset to a controllable electronic record, parties involved in the transfer of such assets must still comply with applicable laws, including corporate and securities laws and regulations.¹³ Even so, the 2022 Revisions afford legal clarity and certainty to parties seeking to leverage blockchain technology in developing new or enhancing existing financial products.

Controllable Accounts and Controllable Payment Intangibles: A Blueprint as to the New Tool’s Use

Rather than leave it to the reader’s imagination, the 2022 Revisions put the tethering technique into practice. By linking a controllable electronic record with the established U.C.C. concepts of accounts and payment intangibles, the 2022 Revisions mint two additional asset categories: controllable accounts and controllable payment intangibles.¹⁴ Controllable accounts and controllable payment intangibles offer a blueprint of how to develop new tools of commerce and finance using the controllable electronic record as a bridge between old concepts and new technology. Each can be created via an undertaking by an account debtor to pay the person who has control of the controllable electronic record evidencing the account debtor’s underlying obligation.¹⁵

Control: An Alternative Means of Perfection

Because controllable electronic records are general intangibles, a security interest in them may be perfected by filing a financing statement.¹⁶ Indeed, prior to the 2022 Revisions, filing was the only means of perfection available to lenders wishing to take cryptocurrencies as collateral. The 2022 Revisions offer secured lenders an alternative means of perfection: control, ¹⁷ which results in a security interest senior to one perfected by filing.¹⁸

An accepted way to perfect security interests in deposit and securities accounts, control is not a new concept to the U.C.C.¹⁹ In the context of a controllable electronic record, control is established if the secured party has (a) the power to avail itself of substantially all of the benefits of the controllable electronic record; (b) the exclusive power to prevent others from availing themselves of such benefits; (c) the exclusive power to transfer these powers to another person; and (d) the ability to identify itself, including by name, identifying number, cryptographic key, office, or account number, as the person having such powers.²⁰ It follows that, to serve as collateral that can be perfected by control, a controllable electronic record, such as cryptocurrency, must be maintained on a system that permits a secured party to be identified as the person having the exclusive right to enjoy and transfer the controllable electronic record. This pattern extends to controllable accounts and controllable payment intangibles in that security interests in each are perfected by establishing control over the controllable electronic record associated with them.²¹

Secured parties should be mindful of the potential of changes to blockchain protocols that may occur after their security interest in a controllable electronic record is perfected. If such a change results in a new controllable electronic record that exists alongside the original controllable electronic record in an event often referred to as a “hard fork,” and the secured party is unable to establish control over the new record, the security interest will remain perfected for only twenty-one days.²² A protective measure against this admittedly unlikely scenario is to perfect security interests in controllable electronic records both by filing and by control.²³

Adaptations to Blockchain Technology’s Decentralization and Pseudonymity

The 2022 Revisions build upon long-established U.C.C. concepts, adapting them to blockchain technology. These adaptations come into relief in how the 2022 Revisions amend provisions of the U.C.C. dealing with control of electronic documents of title and electronic chattel paper.²⁴ The 2022 Revisions change these provisions to accommodate two novel blockchain attributes: decentralization²⁵ and pseudonymity.²⁶

Prior to the 2022 Revisions, these provisions of the U.C.C. presumed a “single authoritative copy . . . which is unique” that identifies the individual asserting control, or designated as assignee of, the record in question.²⁷ A blockchain ledger, however, provides no such unique record. The ledger is instead decentralized with records of transactions distributed among its users, residing not in one place or computer but in many.²⁸ Similarly, because blockchain ledgers assign users random alphanumeric codes instead of capturing their names, there is no way to identify the individual who would have control for purposes of these U.C.C. provisions.²⁹

The 2022 Revisions resolve these inconsistencies with distributed ledger technology. They provide that control may be established using a system that allows “each electronic copy to be identified as an authoritative or nonauthoritative copy”³⁰ and the person asserting control to be identified “in any way, including by name, cryptographic key, office or account number.”³¹ Absent these revisions, electronic documents of title and electronic chattel paper maintained on blockchain ledgers would be out of the U.C.C.’s scope, depriving holders of such property of the legal certainty and efficiencies that the U.C.C. affords to holders of more traditional types of personal property.

The Take-Free Principle: Protection of the Good Guys

Among the many useful concepts embedded in the U.C.C. is the principle that the interests of a good-faith purchaser who acquires an asset for value ought to be protected from competing interests regardless of what rights, if any, the seller of that asset may have had.³² This “take-free” principle promotes commerce by affording good actors a measure of certainty that would otherwise require costly and lengthy due diligence into the provenance of the asset in question.

Prior to the 2022 Revisions, however, this principle was available only in the context of physical, paper-based transactions. By extending the take-free principle to “qualifying purchasers” of controllable electronic records, controllable accounts, and controllable payment intangibles,³³ the 2022 Revisions afford the digital economy a substantial degree of legal certainty.³⁴ Keeping to the formula established in the analogous U.C.C. provisions, a “qualifying purchaser” is one who obtains control of a controllable electronic record “for value, in good faith, and without notice of a claim of a property right” that competes with the interests of the purchaser.³⁵

These protections have a limit, however. They only extend to controllable electronic records (which includes cryptocurrencies), controllable accounts, and controllable payment intangibles.³⁶ A purchaser of other assets, even if tethered to a controllable electronic record, would not enjoy take-free protections unless provided for by laws other than the U.C.C.³⁷

The 2022 Revisions: The Master Crypto Key

Since October 31, 2008, when bitcoin was first proposed,³⁸ the idea of cryptocurrencies and other digital assets based on distributed ledger technology has gained wide acceptance. Until recently, despite acceptance of cryptocurrencies,³⁹ digital assets have remained apart from the traditional elements of mainstream commerce. With the tools forged by the 2022 Revisions, however, designers of financial products will be equipped to unlock the full potential of the blockchain and similar distributed ledger technology.

Footnotes

^{1 S. 1840A, 2025–2026 Leg. (N.Y. 2025); Assemb. A3307A, 2025–2026 Leg. (N.Y. 2025).}

^{2 Uniform Commercial Code Amendments with Prefatory Note and Comments (2022) (Am. L. Inst. & Unif. L. Comm’n 2022) [hereinafter 2022 Revisions].}

^{3 Unif. L. Comm’n, Summary of the 2022 Amendments to the Uniform Commercial Code (2022).}

^{4 12 U.S.C. §§ 5901–5916. Jessie Cheng offers a good overview of the Act. Jessie Cheng, A GENIUS Act Gameplan: Strategic Paths for Payment Stablecoin Issuers, Bus. L. Today (Aug. 13, 2025). See generally The Genius Act Is Enacted, Davis Polk (July 18, 2025).}

^{5 See, e.g., OCC Interpretive Letters No. 1170 (July 22, 2020) (confirming authority of a national bank to provide cryptocurrency custody services), No. 1172 (Sept. 21, 2020) (concluding that a national bank may hold deposits as reserves for stablecoins), No. 1174 (Jan. 4, 2021) (permitting national banks and federal savings associations to use distributed ledger technology, referred to as independent node verification networks, in the course of performing permitted payment activities), No. 1186 (Nov. 18, 2025) (granting a petitioner bank’s request to pay blockchain network fees and hold “crypto-assets” on its balance sheet as principal for such fees).}

^{6 See, e.g., Vicky Ge Huang, JPMorgan Tokenizes Private-Equity Fund on Its Own Blockchain, Wall Street J. (Oct. 30, 2025).}

^{7 U.C.C. § 12-102 (Am. L. Inst. & Unif. L. Comm’n 2022) (proposed U.C.C. amendments). Unless stated otherwise, references herein to the U.C.C. are to the U.C.C. as amended by the 2022 Revisions.}

^{8 2022 Revisions, supra note 2, prefatory n. to art. 12, at cmt. 1.}

^{9 U.C.C. § 12-102.}

^{10  Revisions, supra note 2, prefatory n. to art. 12, at cmt. 4(a).}

^{11 Id.; see also id. official cmt. 9 to U.C.C. § 12-104 (“certain controllable electronic records may carry with them rights to other assets”); id. official cmt. 9 to U.C.C. § 8-102 (discussing treatment of a “digital asset such as a controllable electronic record” as a financial asset); U.C.C. § 9-102(27A) (defining controllable account as an account evidenced by a controllable electronic record); U.C.C. § 9-102(27B) (defining controllable payment intangible as a payment intangible evidenced by a controllable electronic record).}

^{12 2022 Revisions, supra note 2, official cmt. 18 to U.C.C. § 8-102.}

^{13 Id.}

^{14 U.C.C. §§ 9-102(27A), 9-102(27B).}

^{15 Id.}

^{16 U.C.C. § 9-312.}

^{17 U.C.C. § 9-314}

^{18 U.C.C. § 9-326A.}

^{19 U.C.C. § 9-314(a).}

^{20 U.C.C. § 12-105}

^{21 U.C.C. § 9-107A.}

^{22 2022 Revisions, supra note 2, official cmt. 13(f) to U.C.C. § 9-102.}

^{23 Id.}

^{24 U.C.C. §§ 7-106(b), 9-105(b).}

^{25 2022 Revisions, supra note 2, official cmt. 6 to U.C.C. § 7-106 (“The utility of distributed ledger technology depends on there being multiple authoritative copies of an electronic record.”).}

^{26 Id. prefatory n. to art. 12, at cmt. 1 (“Many systems for transferring controllable electronic records are pseudonymous, so that the transferee of a controllable electronic record may be unable to verify the identity of the transferor. . . .”).}

^{27 U.C.C. §§ 7-106(b)(1), 9-105(1) (as in effect prior to the 2022 Revisions).}

^{28 Michael J. Casey & Paul Vigna, The Truth Machine 64 (St. Martin’s Press 2018).}

^{29 Id. at 33.}

^{30 U.C.C. §§ 7-106(c)(1), 9-105(c)(1).}

^{31 U.C.C. §§ 7-106(c)(2), 9-105(c)(2).}

^{32 See U.C.C. §§ 2-403, 3-305, 7-502, 9-317.}

^{33 U.C.C. § 12-104(e).}

^{34 2022 Revisions, supra note 2, official cmt. 7 to U.C.C. § 12-104.}

^{35 U.C.C. § 12-102.}

^{36 U.C.C. §§ 12-104(a), 12-104(e); 2022 Revisions, supra note 2, official cmt. 9 to U.C.C. § 12-104.}

^{37 U.C.C. § 12-104(f); 2022 Revisions, supra note 2, official cmt. 9 to U.C.C. § 12-104 (“Subsection (f) . . . limits the application of the take-free rule . . . to controllable electronic records and . . . controllable accounts and controllable payment intangibles evidenced by a controllable electronic record.”).}

^{38 Casey & Vigna, supra note 28, at 29.}

^{39 See, e.g., Alexander Osipovich & Vicky Ge Huang, Trump 2.0 Era Brings Flurry of Crypto Deals, Wall St. J. (Apr. 26, 2025).}