US Commercial Code Amendments Differentiate Between Crypto and “Electronic Money”

The updated guidelines are intended to clarify the terms of lending crypto assets and clarify the status of CBDCs.

A joint committee of the United States Uniform Law Commission (ULC) and the American Law Institute (ALI) has finalized amendments to the Uniform Commercial Code (UCC), regulating the specifics of digital asset transactions and financing secured by crypto-collateral. .

The amendments are “recommended for enactment in all states,” although each eventual implementation case may vary by state.

A final version of amendments from the UCC-ALI Emerging Technologies Committee to UCC was approved at a July 8-13 meeting. The main updates for the crypto industry appeared in articles 3 and 9, the new article 12 also contains a set of relevant details.

The amendments introduce a concept of “verifiable electronic records,” which would cover not only the existing blockchain-backed asset, but also all future types of digital assets. Defined as a "record stored in electronic media", auditable electronic records incorporate cryptocurrencies and non-fungible tokens (NFTs), but are separated from the category of "electronic money".

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"E-money" is included in the revised category of "currency" and refers to fiat digital currencies. Thus, central bank digital currencies (CBDCs) could be considered "e-money" under the new guidelines, unlike cryptocurrencies.

As analysts at JD Supra have pointed out, in practice, this differentiation means that "perfection of a security interest in the CBDC can only be achieved through the lender's 'control' over the CBD...