Committee Reports

Report in Support of Enacting New York Version of ‘Emerging Technology Amendments’ to the Uniform Commercial Code

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Introduced as A.10579 / S.7244-A (2024)


Overview of the New York Emerging Technologies Amendments to the Uniform Commercial Code

Supporting Organizations

Talking Points and Resources

Letter to Sen. Hoylman-Sigal urging amendments to S.7244 to reflect the full text of the Amendments (Nov. 2023)



The New York City Bar Association (“City Bar”) Task Force on Digital Technologies[1] (“Task Force”) endorses enactment in the State of New York of the attached New York version (“Amendments” or “New York Amendments”) of the Amendments to the Official Text of the Uniform Commercial Code (2022) (the “Emerging Technologies Amendments”).

Enactment of the Amendments is necessary to preserve New York’s preeminence as a leading commercial jurisdiction by adapting New York’s Uniform Commercial Code (“UCC”) to recent and potential future developments in technology and related new methods of doing business.

What the Amendments Accomplish

The Amendments are designed to modernize, rationalize and clarify New York’s UCC so that it effectively governs important transactions in digital assets,[2] while applying to certain digital assets the unique characteristics of New York law that facilitate the negotiability of written instruments and, thereby, enhance transactional certainty.  The Amendments also further the purpose of New York’s Electronic Signature and Records Act (“ESRA”)[3] – now almost a quarter-century old – to make commercial law more media-neutral in order to facilitate electronic commerce,[4] i.e., use of technology to accomplish transactions traditionally based on delivery of signed paper documents.

Most importantly, the Amendments utilize the concept of a “controllable electronic record” to provide legal recognition for, and thereby facilitate the creation of, a broad range of new forms of intangible property or digital assets (rather than limiting digital assets to specifically enumerated types of property)[5] and to define the rights of purchasers of such digital assets in order to enhance their commercial utility.  Second, a controllable electronic record is defined broadly, so that it is technology-neutral and not limited to any particular existing technology utilized to establish “control”.[6] Third, the Amendments specifically recognize as digital assets controllable accounts and controllable payment intangibles.  These are accounts and payment intangibles which, by their terms, the obligor has agreed are payable only to the person in control of a specified controllable electronic record.

These changes tailor the rules of the UCC to make them more appropriately and usefully applicable to cryptocurrencies, crypto-tokens, electronic money, electronic promissory notes and bills of exchange, and any existing or future forms of payment obligations evidenced by a controllable electronic record payable to the person in control, which are maintained on distributed ledger platforms, or any future technology platforms, satisfying the criteria for a controllable electronic record.

The Emerging Technologies Amendments to the Official Text of the UCC

Digital assets began to evolve several decades ago, and the UCC has periodically been amended to accommodate their existence.[7] Since the last comprehensive revisions to the Uniform Law Commission’s Official Text of the Uniform Commercial Code (“UCC”), promulgated in 2010 and substantially adopted by the New York Legislature in 2014, electronic commerce has continued to expand and evolve and become ever more important to the U.S. and world economy.  Furthermore, during the past decade, emerging technologies have led to the creation of an entirely new class of digital assets, which exist on distributed ledger or blockchain platforms and can be used to accomplish an increasing number and variety of transactions.  These digital assets dramatically transform commerce, but their legal effect is subject to significant uncertainties requiring a clear modern legal structure if they are to achieve their full potential.

As described in Section IV, below, the Emerging Technologies Amendments are designed to update the UCC, which is in effect in all 50 States and the District of Columbia, to increase commercial activity (and make it more efficient and secure) by more fully recognizing the use of electronic records in lieu of paper documents, and, even more significantly, by providing clear rules governing transactions in digital assets.

The Emerging Technologies Amendments are not intended to change the well-established and proven policies and principles of commercial law embodied in the UCC, but rather to revise the UCC to better apply these tried-and-true principles to commerce involving electronic records and, particularly, to commerce in digital assets.

Flexibility of the Emerging Technologies Amendments 

The Emerging Technologies Amendments are limited to issues of commercial law and do not address every issue raised by the development or use of electronic records or digital assets.  The primary purpose of the Emerging Technologies Amendments is to clarify the rights of market participants who acquire digital assets, in order to incentivize and encourage innovation and increased commercial activity using new technologies.  They do this, in particular, by (i) making clear how the existing principles of the UCC apply to transactions in digital assets and traditional transactions utilizing electronic records and (ii) applying the fundamental concepts of negotiability to transfers of certain digital assets.

The Amendments focus on the rights acquired by transferees of interests in digital assets.  They are not intended to, and do not, address regulatory or public interest issues outside the scope of the UCC.  Thus, they do not concern the technology by which such assets are created, and, in fact, are intended to be neutral on that subject.  (See footnotes 18, 25, 26 and 27, and accompanying text, below).  Such non-UCC issues, which are not the subject of the Amendments, are the subject of other federal and state laws, including environmental, securities, commodities, banking, and investor and consumer protection laws.  The Amendments leave such public interest issues to the appropriate regulatory laws and regulators.

Benefits to New York of Enactment of the Amendments

As described in Section V, New York commercial and financial law has unique respect for freedom of contract and strong protections for the negotiability of commercial instruments.  This has long made New York the preferred U.S. jurisdiction for paper-based commercial and financial transactions; this is currently not yet the case for transactions involving digital assets.  If New York were to enact the New York Amendments, New York would retain its commercial primacy.  New York is currently the only  state which has not  enacted the Uniform Law Commission’s proposed Uniform Electronic Transactions Act or UETA, with its concept of transferable electronic records.[8]

Enactment of the New York Amendments  will eliminate existing impediments (described, below, in Sections IV(B) and (C) and V(A)) to the choice of New York law and jurisdiction to govern transactions in, and to resolve disputes concerning, digital assets.  More than that, enactment of the Amendments would make choice of New York law and jurisdiction affirmatively attractive for purchasers of digital assets.  This will further New York’s long-standing goals (i) of encouraging choice of New York law and jurisdiction to govern commercial contracts[9] and (ii) of making the advantages of electronic commerce available to the greatest extent in New York.[10]

The Amendments, crafted specifically for New York, are intended to preserve and apply existing New York-specific principles, particularly those (described below, in Section V.B) protecting the rights of good faith purchasers of negotiable instruments and documents, to transactions involving digital assets which are the electronic equivalent of such instruments and documents.

By updating New York’s UCC to cover all digital assets that are controllable electronic records, prompt enactment of the Amendments would encourage parties to choose New York law and courts to govern commerce in digital assets, particularly those which function as electronic money or electronic notes, drafts, bills of exchange, or other electronic media.  Encouragement of New York-based digital commerce would be expected to increase business revenues, professional service fees and incomes in New York, and, as a result, New York tax revenues, and possibly future tax revenues on digital transactions.  New York’s failure to enact the Amendments (combined with their enactment in other States) could be expected to reduce governmental revenues that might be derived from digital transactions, including UCC filing fees, court filing fees and entity incorporation fees.

Enactment of the Amendments would not impose any additional expense on New York governmental operations.

The Emerging Technologies Amendments Have Been Carefully Vetted

The study, drafting and vetting process that produced the Emerging Technologies Amendments was organized by the Uniform Law Commission (“ULC”) and the American Law Institute (“ALI”), the sponsors of the Official Text of the UCC, which is the foundation for commercial and financial law throughout the U.S. The Amendments are a tailored version of the Emerging Technologies Amendments designed specifically for New York’s UCC, which differs in some respects from the current Official Text of the UCC.

Using the Emerging Technologies Amendments as the basis for updating New York’s law governing digital assets is the most prudent course of action.  It will preserve overall consistency with the commercial law of the other States which have or are expected to adopt the Emerging Technologies Amendments.  It is preferable to attempting to draft from scratch a new commercial or financial law limited to digital assets.  Most importantly, it recognizes that the commercial law governing electronic transactions and digital assets does not require entirely new legal doctrines, policies or principles, but rather the extension and application of existing legal concepts used for paper-based transactions to transactions executed in electronic media or involving digital assets.  No better alternative to the principles embodied in the UCC exists.

Summary of This Report 

Section II is the City Bar’s recommendation that the Amendments be enacted.

Section III describes the three-year drafting and vetting process that produced the Emerging Technologies Amendments.  Six lawyers of the New York bar were leaders of this process, and innumerable other New Yorkers participated.

Section IV summarizes the significant improvements the Emerging Technologies Amendments make to the official text of the UCC.

Section V summarizes the dramatic improvements that enactment of the Amendments, based on the Emerging Technologies Amendments, would make available for New York commercial activity.

Appendix B provides a detailed description of the changes to each Article of the New York UCC (each of which is referred to herein as an “Article”) proposed by the Amendments, including, particularly, new Article 12 – Controllable Electronic Records, and the extensive amendments to Article 9 – Secured Transactions, as well as the transition rules for the effectiveness of the Amendments.

Appendix C contains the draft of the proposed amendments to New York’s UCC, tailored specifically to New York’s unique version of the UCC, enactment of which this Report endorses.

Finally, Appendix D describes the function and effect of the Comments to the Emerging Technologies Amendments and the New York Amendments and contains three New York comments to Article 12 of the Amendments, describing modifications of the Emerging Technologies Amendments to deal with issues unique to New York’s UCC.


[1] The Task Force is composed of approximately 90 representatives of 44 committees of the City Bar and adjunct members of the City Bar. Appendix A sets forth the names of the committees along with the representatives who participated in the drafting and/or review of the report. Task Force members represent a wide range of practice areas, and many members represent a range of stakeholders on digital technology issues. The predecessor to the Task Force was a City Bar Working Group on Cryptocurrencies formed in October 2021. The Task Force was established in June 2022. Appendix A also identifies the members of a subcommittee of the City Bar Committee on Commercial Law and Uniform State Laws that formed a drafting subcommittee for this Report.

[2] This Report uses the non-technical term “digital assets” to refer to all assets that depend upon the new concept of a controllable electronic record, as utilized in Articles 7, 9 and 12 of the Emerging Technologies Amendments.  Digital assets include “controllable electronic records,” “controllable accounts” and “controllable payment intangibles” defined in new Article 12 and also include assets excluded from the Article 12 definition but dependent upon the concept of control of an electronic record, such as “electronic money,” “electronic documents of title,” “chattel paper in electronic form,” as well as “transferable records,” as defined in the federal Electronic Signatures in Global and National Commerce Act (“ESIGN”) and the Uniform Law Commission’s model Uniform Electronic Transactions Act (“UETA”). While digital assets include cryptocurrencies, they include far more than that.

[3] N.Y. State Tech. Law Section 301, et seq.

[4] This Report uses the term “electronic commerce” to refer to all commercial and financial transactions utilizing electronic records and electronic signatures, including commerce in digital assets.

[5] The New York UCC currently recognizes only electronic documents of title and electronic chattel paper as digital assets.  Other non-UCC law, such as ESIGN, UETA and ESRA discussed below, also recognize electronic notes (and, in the case of ESRA, electronic instruments) as digital assets.

[6] Prior to approval of the Emerging Technologies Amendments, the only technology recognized to fall within the “safe-harbor” of control of a digital asset was technology that permits the creation, maintenance and transfer of an electronic record that is identifiable as the authentic original and which identifies any copies of that record as copies.

[7] As electronic documents of title, electronic securities and electronic chattel paper came into use, UCC Articles 7, 8 and 9 were amended on an ad hoc basis to accommodate them.

[8] In the late 1990’s as computer technology became more widespread, questions arose as to the enforceability of contracts that were in electronic form, rather than on paper, and “signatures” that were  made electronically (e.g. by checking a box or printing a name on a computer screen), rather than manually.  Many statutes referred to contracts on paper or in writing and to signatures that were written. To deal with this issue, statutes were enacted that provided for the effectiveness generally of electronic contracts and electronic signatures and that thereby overrode other inconsistent statutes.  These statutes included ESRA in New York, ESIGN (a federal law), UETA (a uniform law that has been widely adopted by the states) and specific amendments to UCC Article 7 (relating to electronic documents of title) and Article 9 (relating to electronic chattel paper).

ESRA was one of the first such laws to be adopted and was a leader in the area.  ESIGN, UETA and the  Article 9 amendments followed soon after.  One aspect in which ESRA, ESIGN and UETA differed was  the treatment of negotiable instruments.  UCC Article 3, which governs negotiable instruments, required  negotiable instruments to be in writing on paper and to be signed in writing, and they were transferred or  negotiated by physical delivery.  Accordingly, it was necessary to make special provision in the three new  laws for negotiable instruments.  ESRA permitted negotiable instruments to be electronic if the electronic  system in which it was held allowed only for the existence of one unique unalterable version.  However,  ESRA did not describe how electronic instruments are transferred or how a transferee becomes a holder in  due course.  (As noted, Article 3 requires physical delivery, which is not possible for a document in  electronic form.)

ESIGN and UETA treat negotiable instruments differently from ESRA in three major ways:  (1) UETA applies only to negotiable promissory notes (unlike ESRA which applies to all  negotiable instruments), and ESIGN applies only to negotiable promissory notes secured by real property; (2) UETA and ESIGN both provide that a person having control of an electronic note is the holder and  that such a person may be a holder in due course if it meets the requirements of Article 3 other than the  requirement that the note be in writing; and (3) UETA  and ESIGN both have a test of control which does not require one unique version.  Because UETA and ESIGN have provisions conferring holder in due course status, they have been relied upon to establish various financing programs, including a federal real estate mortgage note program.  Since these programs are running satisfactorily under existing law, the drafters of the Emerging Technologies Amendments did not want to do anything to upset these programs, and accordingly electronic promissory notes under UETA and ESIGN were excluded from the definition of Controllable Electronic Record in new Article 12.  Moreover, the Emerging Technologies Amendments could not impact ESIGN, since it is federal law and would preempt any conflicting state law.

Although legislators could not have foreseen it at the time, the ESRA provision requiring one unique version of an electronic instrument has now become problematic due to recent advances in technology.  Digital ledger technology (also known as blockchain) permits numerous participants to have an identical version of a document and provides assurance that all versions are identical.  Market participants are currently using this technology in the creation of digital assets.  The lack of holder in due course provisions in ESRA, together with the requirement of one unique version in ESRA, make ESRA substantially less desirable for market participants than UETA.  Over the last 20 years, more and more  states have adopted UETA, and today UETA is the applicable law in all states other than New York.

[9] See N.Y. General Obligations Law Section 5-1401 and 1402.

[10] N.Y. State Tech Law Section 301 et seq. and NY Executive Law Section 135-c (authorizing electronic notarization).