Enactment of the 2022 Amendments to the Uniform Commercial Code updates New York’s commercial law to fully recognize electronic records. They also affirm that signed electronic letters of credit have the same legal effect as paper-based LCs.
On 11 June 2025, the New York Legislature enacted the 2022 Amendments to the Uniform Commercial Code (UCC)[[1]] to update New York’s commercial law to fully recognize electronic records, including, most importantly, digital assets, blockchain technology, and tokenized payment rights. The 2022 Amendments have been delivered to New York Governor Kathy Hochul and they will become effective 180 days after her signature.
The 2022 Amendments are based primarily upon the digital assets and technologies-related amendments to the UCC promulgated by the Uniform Law Commission and American Law Institute, with a few variations intended to preserve existing principles under New York law that protect the rights of good faith purchasers of negotiable instruments (consistent with New York’s current non-uniform version of UCC Article 3 (Negotiable Instruments) and UCC Article 4 (Bank Deposits and Collections) that reflect New York policy to promote the negotiability of certain instruments). The 2022 Amendments accommodate the expanding use of electronic technology for commercial transactions (including digitizing trade finance) to provide efficiencies and cost-savings and the continuing development of novel intangibles, such as digital assets, as a new category of potentially valuable commercial property.
The 2022 Amendments will be particularly useful in fortifying New York’s pre-eminent position in U.S. and international trade, commerce, and finance. They preserve and apply the unique provisions of New York commercial law applicable to negotiable instruments to new electronic forms of intangible property (i.e., controllable electronic records, controllable accounts, and controllable payment intangibles) which can be used to evidence transfers of rights in goods and other tangible and intangible property, including payment rights, more efficiently than paper records. Moreover, the 2022 Amendments set out rules governing the rights of transferees of such property; update the rules for perfecting interests in these digital assets; effectively make possible the use of electronic records as negotiable instruments and title documents; and update UCC terminology applicable to assets evidenced by electronic signatures and electronic records.
A key feature of the 2022 Amendments is the introduction of the “controllable electronic record” (CER), a technology-neutral concept that allows for control of digital records through cryptographic or other reliable means. The 2022 Amendments extend negotiability principles to CERs, enabling qualifying purchasers to take CERs free of competing property claims, mirroring protections for securities entitlements. The legislation also preserves established rules for conventional payments and securities.
A key feature of the 2022 Amendments is the introduction of the “controllable electronic record” (CER), a technology-neutral concept that allows for control of digital records through cryptographic or other reliable means.
In addition to addressing digital assets, the 2022 Amendments introduce two simple but significant updates to UCC Article 5 on letters of credit. The first change, in UCC § 5-104 (Formal Requirements), makes clear that signed electronic records have the same legal effect as signed tangible documents, thereby accommodating the increasing use of electronic signatures on letters of credit and related documents. The second change in UCC § 5-116 (Choice of Law and Forum), moves the branch separateness rule to its own subsection, § 5-116(c), and adds a subsection § 5-116(d), to underscore the existing branch separateness rule and explicitly state that bank branches are deemed to be located at the address indicated in the undertaking.
A brief overview of the scope of the 2022 Amendments follows:
• Clarifying rules to establish the means and effect of “control” of certain electronic records. New UCC Article 12 (Controllable Electronic Records) identifies a new category of intangible asset, CERs, which are not limited to, but include, virtual currencies, and crypto or non-fungible tokens, and may evidence electronic promises to pay. CERs are electronic records subject to being “controlled” by an identifiable person, which can now be done using distributed ledger systems.
• Making the UCC media-neutral. The 2022 Amendments make the UCC neutral as to the media used to evidence UCC-governed transactions, furthering the goal of New York’s Electronic Signatures and Records Act to make electronic records and signatures the legal equivalent of written documents and manual signatures. The 2022 Amendments make clear that manual signatures on paper are not required, except where the writing requirement is expressly retained. In addition, the new rules for establishing control are functional and not tied to any specific existing technology. The expansive concept of control set forth in the 2022 Amendments will accommodate both current technologies for achieving control and also future technologies, which should promote innovation.
• Creation of New Types of Negotiable Property. Article 12 identifies two other new intangible assets, controllable accounts and controllable payment intangibles, which are rights to receive payment evidenced by a CER in which the obligor has agreed to pay the person in control of such CER. These intangible rights to payment are transferred by control of the CER that evidences them and such control perfects the transferee’s interest without the need for a UCC filing under Article 9. Furthermore, the 2022 Amendments add provisions strongly protective of the rights of purchasers of controllable accounts and controllable payment intangibles, whether outright or only for purposes of security or collateral. The 2022 Amendments will protect purchasers who obtain control of digital assets from adverse property claims, including prior security interests perfected only by UCC filings against intangibles, to such CERs so long as the purchaser obtains control in good faith and without notice of the adverse claim.
• Electronic Money. The 2022 Amendments clarify the rules governing security interests in controllable electronic records commonly called cryptocurrencies. The 2022 Amendments do not recognize Bitcoin or any other cryptocurrency as money; they are simply controllable electronic records.
• Electronic Chattel Paper; Electronic Documents of Title; and Securities Entitlements. With respect to electronic chattel paper, the 2022 Amendments incorporate into UCC Article 9 (Secured Transactions) the rule recognizing control without the need for the existence of a single authoritative electronic record, thus allowing for distributed ledger systems. Moreover, they preserve New York’s existing recognition of electronic documents of title in UCC Article 7 (Documents of Title) as well as the potential for CERs of all types to constitute “financial assets” governed by UCC Article 8 (Investment Securities), becoming securities entitlements which may be credited to a securities account with a securities intermediary.
• Governing Law. The 2022 Amendments contemplate that the parties may choose, in the CER or system hosting the CER, the law and forum that applies to their transaction for commercial law purposes and provides default rules for when no choice is made.
• Hybrid Transactions in Goods. The 2022 Amendments provide clarification regarding the application of the UCC for hybrid type transactions relating to (i) the sale and lease of goods and (ii) contracts for services or for the sale or licensing of intangibles (e.g., sales of computers with software).
• Negotiable Instruments. The 2022 Amendments do not purport to make Articles 3 or 4 applicable to those CERs which would be negotiable instruments if in writing. New Article 12 provides that purchasers of CERs that evidence controllable accounts and controllable payment intangibles have, as “qualifying purchasers”, some key protections analogous to those applicable to Article 3 holders in due course of negotiable payment obligations evidenced by writings.
• UCC Article 5 (Letters of Credit) Updates. The 2022 Amendments make clear that signed electronic letters of credit have the same legal effect as signed tangible (paper-based) letters of credit. In addition, they underscore branch separateness by explicitly stating that branches are deemed to be located at the address indicated in the undertaking.
In conclusion, the 2022 Amendments will modernize and clarify the UCC as in effect in New York. They will accommodate the expanding use of electronic technology for commercial transactions and recognize digital assets while maintaining the strong protections of negotiability under existing New York law. Taken together, these changes should solidify further New York’s preeminent position as a commercial, financial, and legal center.
[[1]]: The authors recognize the substantial contributions of their colleagues, Alan Kolod and Michael Evan Avidon, to the drafting and enactment of the 2022 Amendments. Alan Kolod chaired the New York City Bar Association subcommittee that drafted the report recommending enactment, helped draft provisions of the bill tailored specifically to New York, and served on the Association’s Presidential Task Force on Artificial Intelligence and Digital Technologies, which was instrumental in advocating for enactment of the 2022 Amendments. Michael Evan Avidon served as a drafting observer in the preparation of the 2022 Amendments and played a key role in drafting the changes to UCC Article 5 on letters of credit
Paul M. Roder co-chairs the Banking and Finance group at Moses & Singer LLP. He represents lenders and borrowers in sophisticated financing arrangements, including trade finance and letters of credit.
Michael Fingerhut is Of Counsel in Moses & Singer’s Banking & Finance group. His practice focuses on the representation of lenders, agents and borrowers in connection with syndicated credit.
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