One of the primary use cases for crypto and digital assets has been lending and borrowing against such crypto assets as collateral, representing billions of dollars of activity. Crypto-backed loans are offered by centralized financial institutions, crypto exchanges, and decentralized finance (DeFi) protocols. Holders of crypto assets have long sought to borrow against their digital assets as collateral to generate leveraged returns and increase yield, such as the recent wave of digital asset treasury (DAT) companies.
At the same time, one of the critical issues facing lenders and holders of cryptocurrencies, non-fungible tokens, and other digital assets, for which up to now there has been an imperfect workaround, has been how to perfect a lien on digital assets and securely protect the lien and digital assets against third-party claims.
Recently and going forward, states throughout the U.S. are increasingly enacting digital asset-specific Uniform Commercial Code (UCC) provisions which will help lenders, pledgors, buyers and sellers of Bitcoin (BTC), Ethereum (ETH), non-fungible tokens (NFTs), stablecoins, and certain other digital assets perfect security interests in such assets and more fully protect- — or even strengthen — their rights as buyers and secured parties against competing property claims. We have seen participants in the crypto lending space utilize UCC filings to perfect their liens against digital assets. As the crypto lending market matures and expands, we would not be surprised if market participants increasingly take advantage of the protections offered by the recently amended UCC in applicable states. These new UCC protections may help initiate increased lending activity as lenders are able to perfect security liens against crypto assets more easily and more securely, as well as lead to new participants entering crypto lending.
As of the date of this advisory, 31 states and the District of Columbia have enacted the 2022 amendments to the UCC, which add a new Article 12 and amend other parts of the UCC to set out new, clarified rules for security interests in, and sales of, certain kinds of digital assets. Legislation to enact these UCC amendments is in process in six additional states, including New York state, which is a significant jurisdiction given New York’s importance as a global financial center. As these UCC amendments become law in more and more states, any secured party who believes it may currently possess a first-priority, perfected lien on, for example, a cryptocurrency or NFT may find that this is no longer the case, unless they apply the new, amended UCC provisions in applicable states. Where enacted, the new UCC Article 12 also offers and will offer an alternative to UCC Article 8 to perfect a lien on certain digital assets without necessarily having to use a securities intermediary and, unlike UCC Article 8, clearly applies the take-free rule to qualified purchasers of some of the most commonly used digital assets such as BTC, ETH, and stablecoins. A buyer of such digital assets may purchase and take good title to such digital assets free and clear of third-party property claims to such digital assets, if the buyer satisfies the “shelter” or “take-free” criteria under the new, amended UCC rules in applicable states.
The below chart summarizes the main revisions to the proposed New York UCC for these digital assets, which were included in a bill passed by the New York State Senate on June 11, 2025, adopting the 2022 UCC amendments. The bill would become law upon signature by New York’s governor. If signed by New York’s governor, the 2022 New York UCC amendments would then become effective 180 days after the bill becomes law.
The New UCC Article 12 and
Related Amendments to UCC Article 9
In conclusion, the 2022 UCC amendments clarify rules on how buyers and lenders may take title to, or a security interest in, some of the most popular digital assets, free of third-party claims of a property interest in such assets, facilitating the transfer, negotiability, and financeability of BTC, ETH, stablecoins, other cryptocurrencies, certain NFTs, and certain related accounts receivable and payment intangibles.
If you have any questions about the UCC and its application to crypto assets or about other corporate issues regarding crypto assets, please contact Charlotte Kim or Jonathan Chan.
[1] New York State Senate Bill S1840-A.
[2] As proposed in New York State Senate Bill S1840-A. The proposed amendments to the New York UCC are largely consistent with the 2022 UCC amendments adopted by the Uniform Law Commission, with a few New York state-specific variations. The summary chart and below Section references are based on the New York UCC amendments proposed in New York State Senate Bill S1940-A. While the chart summarizes the proposed amendments to the New York UCC, many states and the District of Columbia have enacted (or propose to enact) similar amendments to their own states’ Uniform Commercial Codes which are also based on the 2022 UCC amendments adopted by the Uniform Law Commission, and which accordingly contain similar provisions. It is beyond the scope of this advisory to summarize all 50 states however, and readers should check each applicable state as needed for state-specific variations.
[3] Section 12-102(a)(1) of the proposed NY UCC.
[4] Section 12-102(a)(42).
[5] Section 9-102(a).
[6] Section 9-102(a)(27-a).
[7] Section 9-102(a)(2).
[8] Section 9-102(a)(27-b).
[9] Section 9-102(a)(61).
[10] Section 12-102(a)(1).
[11] Section 9-312(a).
[12] Section 9-314(a).
[13] Section 9-326(A).
[14] Sections 9-107A(a) and 12-105.
[15] Section 12-105(c) describes when a power is not shared or exclusive for purposes of Section 12-105.
[16] Section 12-105(b)(2).
[17] Section 9-107(A)(b).
[18] Defined in Section 8-303.
[19] Sections 12-104(a) and 12-104(d).
[20] Sections 12-104(a) and 12-104(e).
[21] Section 9-317(h).
[22] Section 9-317(i).
[23] Section 12-102(a)(2).
[24] Section 12-102(a)(4).
[25] Sections 12-104(a) and 12-104(h).
[26] Section 12-107(a).
[27] Section 9-306(B).
[28] Section 12-106(c).
[29] Section 12-A-102(a)(1).
[30] Article 12-A describes the transition rules in detail.
