TRANSACTIONAL LAW CORNER
TRANSACTIONAL LAW CORNER
Top 10 Things to Know About Florida’ s New UCC Article 12 Governing Digital Assets
JEFFREY H. MARCUS
Florida, like many other states, has adopted the new Uniform Commercial Code(" UCC ") Article 12, effective July 1, 2025. The following is how UCC Article 12 treats digital assets in commercial transactions and advances the law into the new digital age.
Here are the top 10 things to know:
1. Addressing Gaps in Existing Law: Article 12 addresses the lack of clear legal provisions in Florida law regarding digital assets and their use in secured transactions.
2. Expanded Scope of Digital Assets: The new article provides specific legal treatment for digital assets previously categorized broadly as " general intangibles," adding clarity to ownership, transferability, and perfection of security interests in these assets. Article 12 does not address chattel paper evidenced by an electronic record, electronic documents of title, investment property, deposit accounts, electronic( fiat) money, or transferable records( UETA, E-SIGN). Many Article 12 provisions are harmonized with existing UCC laws and concepts. For example, Article 12 ' s approach to " Qualified Purchasers " is similar to the concept of a holder in due course or a bona fide good faith purchaser. The approach to perfection and priority under Article 12 is based on Article 9.
3. Impact on Secured Transactions: The new rules significantly impact secured transactions by providing a clear framework for using digital assets as collateral, including methods for perfection and priority rules for competing security interests.
4. Focus on Controllable Electronic Records(" CERs "): Article 12 defines
CERs in § 669.102, as a record in an electronic medium, subject to control under § 669.105. The term does not include a central bank digital currency(" CBDC "), a controllable account, a controllable payment intangible, a deposit account, an electronic chattel paper, an electronic document of title, electronic money, investment property, or a transferable record.
5. The Concept of " Control ": Control is a central concept in Article 12, § 669.105, defining ownership and rights over a CER based on the ability to use, prevent others from using, and transfer the asset. Control is different from possession. Absent control, Article 12 does not apply.
6. " Control " as Perfection and Super- Priority: Obtaining " control " over a CER is crucial because it establishes perfection of a security interest and grants the secured party a " superpriority " status over other secured parties who have not obtained control, even if they filed a financing statement earlier.
7. Qualifying Purchasers(" QPs ") and " Take Free " Rules: Article 12 introduces the concept of " qualifying purchasers ", providing legal certainty by allowing a QP who acquires a CER for value, in good faith, and without notice of conflicting claims, to take the asset free of those claims.
8. Governing Law and Perfection: Article 12, § 669.107, the governing law rule, provides that the local law of a controllable electronic record ' s jurisdiction governs a matter covered by Article 12. It also provides rules for determining a controllable electronic record ' s jurisdiction, and for a default choice of law of the
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District of Columbia, in case none of the rules as applied are outcome determinative. A security interest in a CER, a controllable payment intangible, or a controllable account can be perfected by the filing of a financing statement or by an acknowledged control over the CER.
9. Definition of Money and CBDCs: Florida ' s UCC, as amended, defines " money " as a government-authorized medium of exchange and specifically excludes any central bank digital currency(" CBDC ") from its scope.
10. Transition Period: For existing transactions( transactions validly entered into before July 1, 2025), there may be a transition period to complete or enforce such transactions under pre-July 1, 2025 laws.
Key Take-aways: Business attorneys should become familiar with UCC Article 12, particularly the concept of Controllable Electronic Records(" CERs "). Businesses dealing with digital assets like cryptocurrencies and NFTs need to understand Article 12 to ensure proper handling of ownership, transfers, and security interests in these assets, and to protect clients ' legal rights and interests. For further reading and in-depth commentary on Article 12, refer to the White Paper prepared by the Joint Task Force between the Business Law Section’ s Blockchain and Digital Assets Committee and the Section’ s UCC / Bankruptcy Committee( 08 / 2023), available here: https:// flabizlaw. org / wpcontent / uploads / 2023 / 08 / Exhibit-D-7.8.1- White-Paper-and-UCC-Fla-Stat-Chartver-20230802. pdf.
Article written by Jeffrey H. Marcus, Esquire. On behalf of the Palm Beach County Bar Association Transaction Law Committee, Dominic Liberi, Esquire, Chair.