Control-based perfection
UCC Article 12, now enacted in 33 jurisdictions including New York, fundamentally changes how security interests in digital assets work. Traditional Article 9 rewards the first to file. Article 12 rewards the party who obtains control, with priority over filers regardless of timing. This is a structural shift in secured transactions law.
The legal infrastructure for digital collateral
The 2022 UCC Amendments created Article 12 to address assets that exist only in electronic form: cryptocurrency, tokenized securities, electronic payment rights, and other controllable electronic records. Unlike traditional secured transactions where filing a UCC-1 establishes priority, Article 12 uses control as the basis for perfection, and control trumps filing.
Controllable Electronic Records
A record stored in an electronic medium that can be subjected to "control" as defined by the statute. Includes cryptocurrency, NFTs, tokenized payment rights, and electronic promissory notes. Not physical assets digitized; native digital assets.
Control-Based Perfection
A secured party perfects by obtaining "control" of the CER. Control requires: (1) power to enjoy substantially all benefits, (2) exclusive power to prevent others from enjoying benefits, and (3) exclusive power to transfer control. This requires technical architecture.
Super-Priority
A secured party with control has priority over a secured party who only filed a financing statement, even if the filing was earlier. This inverts the traditional first-to-file rule. Platforms that build control infrastructure now gain structural advantages.
Every step automated. Every filing tracked.
Asset Classification
Automatic determination of applicable UCC article based on asset type and custody arrangement. Classification drives the perfection path.
Debtor Validation
Name matching against driver's license for individuals, Secretary of State records for entities. Prevents lapse due to name mismatch errors.
Jurisdiction Determination
State of principal residence for individuals, state of organization for registered entities. For CERs, choice-of-law provisions may override.
Control Infrastructure
For Article 12 assets, technical integration with custodians to establish and maintain control. Actual system architecture.
Collateral Description
Asset-class-specific templates generate compliant descriptions. Private equity interests require different language than cryptocurrency holdings.
Continuation Tracking
Five-year expiration tracking with automated reminders at 90, 30, and 7 days. Continuation filings submitted before lapse.
Filing Provider Integration
Direct submission to CT Corporation and CSC with real-time status updates. Filing confirmation within 24 hours.
Articles 8, 9, and 12 in one engine
Alternative asset lending requires different UCC articles for different collateral types. We automate perfection across all three, selecting the appropriate path based on asset classification.
Article 8: Securities
Investment property including certificated and uncertificated securities. Perfection through control agreements with securities intermediaries. Used for public equities, ETFs, and traditional brokerage holdings.
Article 9: General Intangibles
Catch-all for assets not covered elsewhere. Private equity interests, fund participations, IP rights, and contract rights. Perfection through UCC-1 filing with debtor name validation and jurisdiction determination.
Article 12: Controllable Electronic Records
Native digital assets including cryptocurrency, tokenized securities, and electronic payment rights. Perfection through control with super-priority over filers. Requires technical infrastructure.