The New York State Legislature has passed a bill to adopt UCC Article 12 – a key legal reform that formally recognises the transfer and control of digital assets, including electronic trade documents. The bill now awaits the Governor’s signature, after which it will enter into force following a 180-day implementation period. This marks a significant step toward legal certainty for digital trade in the US.
Patrik Zekkar, CEO of Enigio, sees this as a defining moment.
“When we look back, I believe this will be recognised as a key moment in the global transition to digital trade. The adoption of UCC Article 12 signals that the US is serious about creating legal certainty for digital trade flows. It’s not just a regulatory update – it’s an invitation to innovate, transact, and grow with confidence in a digital-first environment. For those already embracing digital trade, it’s a clear sign that they’re on the right path.”
What is UCC Article 12?
UCC Article 12 introduces a legal framework for “controllable electronic records” (CERs), a category of digital assets that can be controlled and transferred in a manner functionally equivalent to possession of physical documents. This is particularly significant for trade finance instruments like bills of exchange and promissory notes, which rely on the legal concept of possession to determine ownership and enable lawful transfer.
With Article 12, these instruments can now be issued, transferred, and enforced in fully digital form – without compromising their legal effect – so long as the required standard of control is met.
However, not every digital document qualifies under Article 12. To fall within its scope, a document must be a CER – meaning it must exist entirely in digital form and be subject to exclusive control by one party at a time.
Global alignment – but with complexity
The move brings New York into closer alignment with international frameworks such as MLETR and the UK’s ETDA, particularly in recognising the concept of control over electronic records. However, Article 12 is not a standalone framework – its full effectiveness depends on how it operates alongside other parts of the UCC, especially Article 9, which governs secured transactions.
Hanna Söderlindh, Head of Legal at Enigio, explains:
“Adoption of UCC Article 12 would lay a critical legal foundation in New York for the enforceability of electronic trade documents and secured digital transactions. While its practical impact depends on how it integrates with other UCC provisions, particularly Article 9, it sends a clear signal that digital negotiable instruments are gaining formal recognition in major jurisdictions. This alignment with global frameworks such as MLETR and the UK’s ETDA not only enhances legal clarity for cross-border trade but also builds confidence among financial institutions, legal practitioners, and platforms seeking to scale digital trade infrastructure.
“It is important to note, however, that Article 12 does not apply to all digital trade documents. Only those that meet the definition of a CER – meaning they are digitally native and structured to meet the control requirements of the UCC – fall within its scope. Instruments that follow older legal models, such as transferable records under the Electronic Signatures in Global and National Commerce Act (E-SIGN) or the Uniform Electronic Transactions Act (UETA), remain governed by different rules. This distinction matters when designing digital trade systems intended to operate with legal certainty across jurisdictions. It is a necessary step toward mainstream adoption – and a sign that legal systems are beginning to catch up with technological capabilities.”
Pamela Mar, Managing Director of the Digital Standards Initiative at the International Chamber of Commerce, comments:
“US alignment to MLETR has been accomplished by Articles 7 and 9 of the UCC already, but the current move in New York helps to raise good attention on the potential of digitalisation on finance. New York, as the financial capital of the US, is really key, and hopefully it can help move the market towards greater digitalisation.”
What’s next?
With the bill now passed by both chambers of the New York Legislature, it awaits the Governor’s signature. Once enacted, a 180 day implementation period will follow, allowing stakeholders – including banks, legal teams, and digital trade platforms – to align systems, documentation, and processes with the new legal framework.
But those eager to lead the transition are preparing now, not waiting.
John Baranello, Head of Trade Finance & Working Capital Product for Lloyds North America, says:
“This is a great step in the right direction. As a leader in the digitalisation of global trade documentation, and the first to complete a transaction following the passing of UK legislation in 2023, we look forward to collaborating with our clients and partners to unlock similar benefits for our US client base.”
And it’s not just banks who are on the move.
“As a provider of trade finance technology to banks and financial institutions, Cibar sees this as an opportunity to innovate alongside our customers – leveraging digital advancements to streamline workflows, reduce risk, and enhance compliance,” says Nick Mayer, President of Cibar. To support organisations in this journey, we offer a comprehensive MLETR readiness checklist to help assess and implement key compliance requirements.
“We’re excited about the potential this framework offers to transform how trade is conducted, enabling our clients to transact with greater confidence in a digitally-driven environment.”
CGI’s Patrick DeVilbiss, Trade360 Head of Product, Trade and Supply Chain Finance, agrees.
“This is another significant milestone in the global effort to establish clear legal foundations for digital trade,” he says. “It unlocks meaningful opportunities for our clients to drive speed, security, and operational efficiency in trade finance through scalable, digital-first ecosystem solutions.”
Given New York’s prominence in governing international trade and finance contracts, this move is likely to influence other U.S. states and may also inform future federal or national approaches to digital trade law. It further enhances interoperability with jurisdictions that have adopted frameworks like MLETR and UK’s ETDA, strengthening cross border recognition and supporting the global adoption of digital trade documentation.
Enigio continues to support market participants in navigating this transition, providing open, interoperable digital solutions designed to meet evolving legal standards in global trade.