Selling or Financing a Business in the Digital Era? Here’s How the New UCC Rules Affect You

For decades, the Uniform Commercial Code (UCC) has provided the backbone for how businesses buy, sell, and finance assets. But until recently, it was written for a world of paper documents and physical collateral. With more assets now existing in digital form, from cryptocurrency to online customer accounts, the rules needed a major update.

That’s where the 2022 UCC Amendments come in. These changes modernize the Code to address digital assets and clarify how they can be transferred, financed, and secured in commercial transactions. The new rules will take effect in many states by July 1, 2026.

Why the UCC Was Revised

The update was driven by one key reality: the way we do business has changed. Digital assets, cryptocurrencies, and other electronically stored rights don’t fit neatly into the traditional categories of “goods,” “accounts,” or “intangibles.” Without a clear legal framework, parties faced uncertainty about who owned a digital asset, how to perfect a security interest, or which state’s law applied in a dispute.

The amendments are designed to bring clarity and consistency to these questions, particularly around digital assets used as collateral in financing or sale transactions.

Introducing “Controllable Electronic Records” (CERs)

A major innovation in the amendments is the creation of a new asset category called Controllable Electronic Records (CERs). CERs include things like cryptocurrency, tokenized assets, or other records that can be controlled electronically — meaning the holder has exclusive power to use, transfer, or exclude others from the asset.

This concept of “control” functions much like possession does for physical assets. Under the new rules, a lender or buyer who has “control” of a CER gains priority over others with only a filing-based claim. That’s a big shift for anyone financing or acquiring a business with digital components.

Why It Matters in M&A

Digital assets are now a standard part of business value: think customer data, social media accounts, NFTs, or even loyalty points. Buyers and lenders need to understand how these assets are treated and secured during a transaction.

Key implications for M&A practitioners and clients include:

• Due diligence should identify any digital or tokenized assets that qualify as CERs.

• Financing documents may need to specify how control is established or transferred.

• Priority disputes could arise if a prior lender claims an interest that wasn’t properly perfected under the new rules.

The Adjustment Date (July 1, 2026) gives existing secured parties time to review and update their filings.

Other Notable Updates

The amendments also:

• Clarify rules for electronic money, addressing how digital currencies issued by governments fit into the UCC framework.

• Update definitions and language throughout the Code to account for electronic signatures and records.

• Provide clearer guidance on hybrid transactions involving both goods and services — a common feature in modern business deals.

The Bottom Line

If you’re planning to buy, sell, or finance a business in the next few years, now’s the time to review how digital assets are handled in your agreements. The 2022 UCC Amendments mark a significant step in aligning commercial law with today’s technology-driven marketplace, and businesses that prepare early will be best positioned when the new rules take effect.