New York State Senator Hoylman-Sigal, chair of the Judiciary Committee, introduced New York State Senate Bill S.7244 on May 19, to adopt a new Article 12-Controllable Electronic Records as part of New York’s Uniform Commercial Code (UCC). https://www.nysenate.gov/legislation/bills/2023/s7244. Senator Hoylman-Sigal should be commended for this vitally important first step, which, hopefully, will lead to New York’s adoption of the Uniform Law Commission’s (ULC’s) July 2022 emerging technology amendments to the official text of the ULC’s UCC, the backbone of commercial law in all 50 States and the District of Columbia.  Article 12, which sets the rules for transfers of “controllable electronic records”, the new legal term for digital assets, is the centerpiece of the ULC’s 2022 Amendments.  But to work properly, it will also require enactment of the ULC’s proposed amendments to other UCC Articles, particularly Articles 7, 8 and 9.  The bill incorporates the version of Article 12 tailored by the New York City Bar Association specifically for New York and recommended for adoption. https://www.nycbar.org/member-and-career-services/committees/reports-listing/reports/detail/emerging-technology-amendments-to-uniform-commercial-code.

Introduction of S.7244, presumably, is the first step in enactment of substantially all of the ULC’s proposals and, as such, is an important development for both the commercial law of the entire U.S., and particularly for New York, the commercial capital of the U.S.  Similar bills have been introduced in at least 21 other state legislatures and have already been enacted by five states. https://www.uniformlaws.org/committees/community-home?communitykey=1457c422-ddb7-40b0-8c76-39a1991651ac#LegBillTrackingAnchor. Other countries, particularly the U.K., are also pursuing enactment of laws providing the rules for commercial transactions dealing with digital assets.  These new rules are essential to promoting the development of commerce, particularly trade finance, evidenced by electronic records, which, when properly conducted, is more secure, reliable, swift, efficient and cost-effective than paper-based transactions.

Alan Kolod and Michael Evan Avidon, served as Observers to the Drafting Committee of the ULC Amendments and were also involved in the drafting of the New York City Bar Report. Alan Kolod chaired the drafting subcommittee of the New York City Bar Association Committee on Commercial Law and Uniform State Laws, which was instrumental in drafting the City Bar Report.

See our prior alerts on why New York should enact the 2022 Amendments:
Summary of Reasons for New York to Enact the New UCC Amendments
Expert Q&A on Why New York Should Enact the 2022 UCC Amendments