Committee hears competing views on UCC changes aimed at prohibiting CBDC and restoring individual securities ownership

Representative J.D. Bernardi introduced House Bill 427 as a two-part measure that would (1) amend the state Uniform Commercial Code to prevent programmable media of exchange from qualifying as a covered deposit account and (2) modify Article 8 language the sponsor said allows large intermediaries to treat securities as pooled entitlements rather than identifiable owner property.

"It disallows programmable medium of exchange as an identified deposit account," Bernardi told the committee in opening testimony and described the change as a prohibition on Central Bank Digital Currency (CBDC) used as a deposit-account form. He urged the committee to adopt Section 5, saying programmable currency could be used to restrict when and where funds are spent.

The hearing became technical and adversarial when David Webb, an international commentator who described himself as an independent researcher, testified that changes adopted in the 1990s to the UCC dematerialized securities and converted investor ownership into pooled "security entitlements." Webb argued those changes exposed investors to loss in insolvency, citing the Lehman Brothers episode and court decisions. He said HB 427 would restore investor ownership rights by striking exceptions that currently favor secured creditors and clearing entities.

The Uniform Law Commission's Charles Mooney, a New Hampshire ULC commissioner, strongly disagreed, calling many of Webb’s factual assertions "wrong" and argued the current intermediated holding model and the 1994 UCC amendments provide practical protections and settlement finality. Mooney cautioned that changes could harm liquidity, raise borrowing costs for brokers and banks, and trigger…