The introduction of UCC Article 12 into U.S. legislation alters the approach to using cryptocurrencies and NFTs as collateral, potentially enhancing liquidity and attracting institutional investors.
Changes in UCC Article 12
This legislation, developed by the American Law Institute and the Uniform Law Commission, modifies the regulation of digital assets. This could lead to a new phase in legislation, affecting cryptocurrencies and NFTs in the context of securing loans.
Impact on Digital Asset Markets
Companies like BlackRock are considering the use of cryptocurrencies in derivative trades in light of new legal clarity. Digital assets, now classified as Controllable Electronic Records, may see improved pricing and liquidity in the lending sector.
The Future of Borrowing with Digital Assets
Previously, digital assets were categorized under general intangibles, but now UCC Article 12 provides 'perfection by control', enhancing collateral priority. Experts predict significant changes in borrowing models based on these legislative innovations.
The adoption of UCC Article 12 is expected to be an important step in ensuring legal certainty in the digital asset market, potentially leading to increased use of cryptocurrencies and NFTs in financial transactions.
