Alabama enacts 2022 UCC Amendments and adds Article 12

Submitted by UCS on June 16, 2023

The 2022 Amendments to the Uniform Commercial Code have been enacted in Alabama.

Alabama is the sixth state to enact the 2022 Amendments, which revise nearly every Article of the UCC. They address emerging technologies by providing new rules for commercial transactions involving digital assets, including virtual currencies and other blockchain-based assets, and revised rules to incorporate other recent technological developments.

New UCC Article 12 defines a class of digital assets called “controllable electronic records” (CERs). This umbrella category includes virtual (non-fiat) currencies, non-fungible tokens (NFT), and digital assets in which specified payment rights are embedded. States that adopt Article 12 will treat CERs as fully negotiable, akin to cash or checks, eliminating much of the risk of accepting payment in CERs that exists under current law. Amendments to UCC Article 9 will allow secured lenders to perfect a security interest in digital assets by “control,” analogous to possession of tangible property.

Controllable electronic records also provide a mechanism for evidencing certain rights to payment. An account debtor (obligor) on such a right to payment agrees to make payments to the person that has control of the CER that evidences the right to payment.

For additional information regarding the enacted bill click here.

UCS makes no warranty or guarantee concerning the accuracy or reliability of the content at this site or at other sites to which we link. Assessing the accuracy or reliability of the information is the responsibility of the user. UCS shall not be liable for errors contained herein or for any damages in connection with the use of the information contained herein. UCS does not provide legal or tax advice. This information is for reference only.