Business and bar groups push UCC updates to govern digital assets and 'controllable electronic records'

Attorneys and business groups told the Judiciary Committee HB 6,970 adopts the 2022 amendments to the Uniform Commercial Code to address commercial transactions involving digital assets.

Jim Schollwel (Shipman & Goodwin) and Thomas Welsh (Connecticut Bar Association) described the changes as an update to the UCC’s treatment of negotiable instruments, secured transactions and electronic records to reflect the growing use of blockchain‑based assets, non‑fungible tokens, electronic negotiable instruments and other digital commerce. The bill would add a new Article 12 addressing “controllable electronic records” and provide rules for perfection, priority and transferability of security interests involving digital assets.

Proponents emphasized uniformity: 25 states had already adopted the amendments at the time of testimony, and Connecticut’s adoption would avoid making the state an outlier in interstate commerce. The CBA’s witnesses said the draft had been vetted by drafting committees and invited experts and that adoption would not endorse any specific cryptocurrency but would provide commercial law rules that permit digital assets to be treated as property within secured‑finance frameworks.

Committee members asked detailed questions about definitions (controllable electronic records vs. controllable accounts), the mechanics of “control” as a method of perfection, the status of digital wallets, and distinctions between electronic money (government issued) and other crypto assets. Witnesses responded that the model avoids locking the law to specific technologies (e.g., blockchain) and uses control‑based rules similar to earlier successful provisions for electronic chattel paper.

No vote was taken; proponents said the bill’s uniformity would help Connecticut businesses and banks avoid transactional friction if surrounding states also adopt the UCC amendments.