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 litigation. He said the depository and clearing system has checks such as the Securities Investor Protection Act (SIPA) and customer-protection rules.

Insurance, business and banking groups also testified. The Business & Industry Association objected to state-level deviations from a national UCC model. Several lawmakers pressed both sides on definitions—what constitutes a deposit account versus a commodity—and whether the bill applied to cryptocurrencies generally or only to government-issued programmable media.

No committee action was taken. Witnesses on both sides asked the committee to refer the bill to a subcommittee for technical review.

Speakers - Representative J.D. Bernardi, prime sponsor (Rockingham 36) — government. 1st ref: s4273.7603–4304.31 - David Webb — researcher/author (testifier from Sweden). 1st ref: s4957.06–4961.16 - Charles Mooney — Uniform Law Commissioner for New Hampshire (testifier). 1st ref: s6519.015–6541.3203 - Andrew Hosmer — (later testified for Harvard Pilgrim on unrelated bill) — business testimony appears elsewhere. 1st ref: s19191.07–19192.43

Authorities - Uniform Commercial Code, Article 8 and related sections (transcript referenced UCC and "Article 8"). - Depository Trust & Clearing Corporation (DTCC) described as central securities depository; witnesses referenced DTCC and clearing/custodial practices. - Securities Investor Protection Act (SIPA) and Securities Investor Protection Corporation (SIPC) referenced by Uniform Law Commission testimony.

Discussion vs. Decision - Discussion only: testimony ranged from detailed legal-historical claims to policy impacts on liquidity and systemic risk. The committee did not adopt changes or reach a decision at this hearing.

Clarifying details - category: statutory reference; detail: sponsor cited RSA 382a9102a29 analogously while referencing UCC changes; value:"not specified"; source_speaker: Representative J.D. Bernardi - category: technical argument; detail: proponent David Webb cited the 1994 UCC amendments as enabling pooled securities use and claimed that in insolvency investors lost timely access to assets (Lehman example); value:"not specified"; source_speaker: David Webb

Proper names - {"name":"Depository Trust & Clearing Corporation (DTCC)","type":"organization"} - {"name":"Lehman Brothers","type":"business"} - {"name":"Uniform Commercial Code","type":"other"}

Community relevance - geographies:["national","statewide"], impact_groups:["retail investors","pension funds","broker-dealers"]

Meeting context - engagement_level:{"speakers_count":10,"duration_minutes":240,"items_count":1}, implementation_risk:"high" (technical changes could have broad financial-market effects), history:[{"date":"1994","note":"Sponsor and witnesses discussed 1994 UCC amendments and their effects"}]

Searchable tags - ["UCC","Article 8","DTCC","CBDC","HB427","securities"]

Provenance - transcript_segments:[{"block_id":"4273.7603-4304.31","local_start":0,"local_end":40,"evidence_excerpt":"Good morning, chairman Hunt and committee. For the record, I'm, representative JD Bernardi...I'm here to introduce house bill 427, which is amending the u the UCC.","reason_code":"topicintro"},{"block_id":"8042.825-8042.0103","local_start":0,"local_end":67,"evidence_excerpt":"We will close the hearing on 427 and if you wanna you have a handout. Just pass it out.","reason_code":"topicfinish"}],

topics:[{"name":"financial markets","justification":"Bill would alter state UCC definitions and property characterization for securities and deposit accounts; commentators linked changes to systemic market structure.","scoring":{"topic_relevance":1.00,"depth_score":0.95,"opinionatedness":0.25,"controversy":0.95,"civic_salience":0.80,"impactfulness":0.90,"geo_relevance":0.50}}],

salience:{"overall":0.82,"overall_justification":"High potential impact on financial markets and investor protections; testimony from international and national experts increased newsworthiness.","impact_scope":"national","impact_scope_justification":"Changes to UCC-like rules affect custody and clearing practices that cross state lines.","attention_level":"high","attention_level_justification":"Complex technical debate; potential to change investor rights and market liquidity.","novelty":0.65,"novelty_justification":"State-level effort mirrors proposals in other states but raises unusual technical legal debate; CBDC prohibition language is new to many jurisdictions.","timeliness_urgency":0.60,"timeliness_urgency_justification":"Global conversations on CBDC and clearing reforms are active; unresolved risk of litigation or cross-jurisdictional conflict.","legal_significance":0.90,"legal_significance_justification":"Would change how property and secured-creditor priorities are allocated under the UCC; interacts with federal securities rules.","budgetary_significance":0.20,"budgetary_significance_justification":"Potential indirect costs to state banks/regulators and litigation risk but no immediate appropriation requested.","public_safety_risk":0.10,"public_safety_risk_justification":"Primarily financial-market risk rather than physical-safety risk."} } , {