Now that state legislatures across the country are working to approve the much anticipated Article 12 to the Uniform Commercial Code (UCC), it is time to prepare for transactions with cryptocurrencies and non-fungible tokens (NFTs) as collateral.
At the heart of the UCC amendments is the concept of “controllable electronic records” (CER), which will normally include cryptocurrencies and NFTs. A CER is (1) a record (2) stored in an electronic medium (3) that can be subjected to control. Control of a CER exists if (1) the electronic record gives a person (a) the power to avail itself of substantially all of the benefits of the electronic record, (b) the exclusive power to prevent others from doing so, and (c) the exclusive power to transfer control to another person and (2) enables the person to readily identify itself as having these powers.
