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The UCC Article 12 transition deadlines are more than calendar entries—they are defining moments for risk and value across portfolios. For secured parties (for instance, a lender under a secured credit facility), delay could place the priority of your collateral at risk, which may limit your recoveries. For debtors (for example, borrowers and other obligors under secured loan facilities), failure of your lender to maintain a first-priority perfected security interest in its collateral could mean a breached covenant, a breached bringdown representation or warranty and possibly an event of default.
If you are a secured party with security interests in assets that may include “controllable electronic records” (CERs) —for instance, crypto and other digital assets—the perfection landscape may be shifting beneath your feet. Here is what you need to know, and—more importantly—what you need to do.
As digital assets increasingly enter the mainstream, more and more debtors have rights, title or interests in digital assets and other CERs that could be pledged as collateral. In 2022, as part of an effort to maintain clarity in secured transactions law involving digital assets, the Uniform Law Commission (ULC) published certain proposed amendments (the 2022 UCC Amendments) to the Uniform Commercial Code (UCC), including anew Article 12 governing CERs, as well as corresponding amendments to Articles 8 and 9. (Although the 2022 UCC Amendments also address “controllable accounts,” “controllable payment intangibles” and “electronic money,” those are outside the scope of this discussion.)
Although New York has not yet adopted the 2022 UCC Amendments, numerous states and territories, including Delaware and the District of Columbia have done so – and not every state that has adopted the 2022 UCC Amendments in a form consistent with the ULC’s recommended form. Because the UCC is a creature of state law, secured parties should be mindful that the transition deadline described in this piece differ from state-to-state. In addition, for parties that have opted into UCC Article 8 (i.e., electing to treat digital assets and other CERs as financial assets held by a securities intermediary), the applicable transition period may not be immediately relevant to their secured transactions. Nevertheless, it is critical that secured parties assess their potential exposure and risks, including because so-called “all assets” liens also could include security interests in assets that are characterized as CERs, even if they were not previously categorized as such.
The 2022 UCC Amendments in the ULC’s recommended form contemplate a transition period, with a goal of giving secured parties a much-needed time window during which to align their collateral packages with the new UCC regime. Typically, the transition period would be at least one year from the date on which the 2022 UCC Amendments take effect in that state, but not earlier than July 1, 2025. During this period, security interests that were valid and perfected under the “legacy” UCC rules continue to be recognized, providing secured parties with a buffer to update documentation or perfect under the new rules without immediately losing priority or perfection status. In many cases, prior to the adoption of UCC Article 12, digital assets were treated as general intangibles under UCC Article 9 (for instance, absent a UCC Article 8 opt-in).
While states have adopted the 2022 UCC Amendments on a staggered basis and thus have differing transition periods, states that were early adopters of the 2022 UCC Amendments have “adjustment dates” in July or August 2025 that mark the end of the transition period.
The end of the proposed transition period in various states is fast approaching or, in some cases, already has arrived. For example, in Delaware, the adjustment date was July 1, 2025 (i.e., the later of (x) July 1, 2025, or (y) one year after August 18, 2023, the date on which the 2022 UCC Amendments became effective in Delaware).1
As such, many secured parties may be faced with a fast-approaching requirement to act. Failing to strategize for the end of the transition period can undo the best-intentioned compliance efforts.
The “first-to-file” rule—which generally gives priority to the creditor that filed first or first perfected their security interest—continues to apply through the transition period. If you properly perfected a security interest before the 2022 UCC Amendments through a UCC-1 filing (or another authorized method), that priority is preserved during the transition window. However, once the transition period ends, new perfection requirements under UCC Article 12 (such as “control” for CERs) will apply fully. If a secured party has not satisfied any such updated requirements by the deadline, that secured party risks losing the priority of its security interest in CERs—even if such secured party were previously first to file or first to perfect under the UCC prior to adoption of the 2022 UCC Amendments.
In short:
UCC Article 12 brings transformations that every debtor and secured party must understand: For covered digital assets, “perfection” by UCC-1 filing alone will rarely be enough to establish priority going forward. UCC Article 12 focuses on “control”—a concept similar to holding the private key or having effective practical authority over the asset.2
If a secured party cannot demonstrate “control” as defined by UCC Article 12, it may lose priority—even if it has a filed financing statement. For many lenders, this means that legacy filings and agreements need to be reviewed, amended, and, in most cases, actively updated.
Many U.S. states have adopted the 2022 UCC Amendments, including Delaware, the home jurisdiction of the vast majority of U.S. business entities (and, therefore, debtors). In addition, UCC Article 12 contains its own choice of law waterfall governing perfection for non-U.S. debtors, with the District of Columbia being the default jurisdiction in most cases. The District of Columbia has adopted the 2022 UCC Amendments, and the transition period ended July 1, 2025.3
However, the reality is that not every state has adopted the 2022 UCC Amendments – and those that have, have not necessarily adopted them in the ULC’s recommended forms.4 Certain key commercial jurisdictions, such as New York, have different rules, at least for now.5 Moreover, in 2019, Wyoming adopted UCC changes analogous to – but different from – the 2022 UCC Amendments.6 In addition, certain other jurisdictions, including South Dakota, adopted versions of the 2022 UCC Amendments that differ from the ULC model recommendations.7
Practical steps for secured parties – now and for the future:
The expiration of various UCC Article 12 transition periods marks a key milestone in a still-developing legal landscape. For both secured parties and debtors, the time for attention –and, potentially, action – is now.
Please contact our team to learn more.
1 DE UCC A-102, https://delcode.delaware.gov/title6/c000a/sc01/index.html.
2 In addition, UCC Article 12 introduces, among other things, a take-free concept applicable to CERs that does not exist for general intangibles under UCC Article 9. As such, a qualifying purchaser of a CER can acquire it free of competing property claims, similar to how a buyer of goods can acquire them free of prior claims under UCC Article 9. Under UCC Article 12, if a purchaser (for instance, a secured party) obtains control of a CER for value, in good faith and without notice of any competing claims, such purchaser would acquire the CER free of any such competing claims.
3 D.C. Law 25-158, https://code.dccouncil.gov/us/dc/council/laws/25-158.
4 As of the date of this article, the 2022 UCC Amendments appear to have been enacted in 32 states and introduced in 6 additional states (MA, MD, OH, NY, SC and TX), according to the ULC online tracker (available at https://www.uniformlaws.org/committees/community-home?communitykey=1457c422-ddb7-40b0-8c76-39a1991651ac#LegBillTrackingAnchor).
5 In NY, the legislature approved the 2022 UCC Amendments in June 2025, but, as of the date of this publication, they have not yet been delivered to the NY Governor for signature or veto (https://www.nysenate.gov/legislation/bills/2025/A3307/amendment/A).
6 See https://wyoleg.gov/InterimCommittee/2021/S19-2021120910-01U~1.PDF (noting that the ULC’s then-proposed amendments “are comparable but distinct from amendments Wyoming made in 2019 SF 0125 (later further amended by 2020 SF 0047 and 2021 HB 0043), which created W.S. 34-29-101 through 34-29-105 and provided changes to Wyoming's UCC law.”).
7 https://www.sdpb.org/politics/2024-02-27/noem-signs-ucc-bill-she-vetoed-last-year.