New York’s legislature has approved bills to adopt Article 12 of the Uniform Commercial Code, marking a significant legal milestone for the recognition and use of digital trade documents in the US. As of August 2025, the reform has passed both chambers but has not yet been enacted, pending Governor Kathy Hochul’s signature. But what does this development actually mean for banks, fintechs, and corporates – particularly those engaged in cross-border trade?
In this article, Enigio’s Head of Legal Hanna Söderlindh explores the legal impact, commercial opportunities, and what gaps still need to be addressed for digital trade to scale globally.
A stronger legal foundation for electronic trade documents
If enacted, New York’s adoption of Article 12 will establish a long-awaited legal framework that recognising electronic trade documents as valid, enforceable, and transferable—placing them on equal footing with their paper-based counterparts. This would reduce ambiguity around key concepts like possession and negotiability when documents are created or transferred in digital form.
Crucially, it would also enable electronic documents to be used as collateral under UCC Article 9, an essential component for secured trade finance transactions. Given New York’s influential role in governing international trade and finance contracts, this legal update could offer greater certainty for cross-border transactions, particularly in sectors that frequently opt for New York law as the governing framework.
However, Article 12 would not apply to digital records that are set up to follow older legal frameworks – such as “transferable records” under the Electronic Signatures in Global and National Commerce Act (E-SIGN)/the Uniform Electronic Transactions Act (UETA) or as “electronic documents of title” under Article 7. This means Article 12 would only apply to digitally native instruments that meet the definition of a Controllable Electronic Record (CER).
Aligning with global standards—sort of
Article 12’s concept of “control”, applied to what it calls Controllable Electronic Records (CERs), is broadly aligned with international frameworks such as UNICITRAL’s MLETR and the UK’s Electronic Trade Documents Act (ETDA).
However, unlike the MLETR and the UK’s ETDA, which are technology-neutral and simply require a reliable method to establish control, Article 12 is more prescriptive. It anticipates blockchain or distributed ledger based systems and relies on cryptographic evidence to establish exclusive control. That specificity could provide greater legal certainty for platforms using structured digital infrastructures, but might limit broader adaptability cross systems that rely on different technologies.
Clarifying the treatment of negotiable instruments
If enacted, Article 12 would help clarify legal uncertainty around the use of digital negotiable instruments - such as tokenised bills of exchange and promissory notes- under New York law. If these instruments were created as CERs, and not as “transferrable records” under E-SIGN or UETA, they could be legally recognised, enforced, and transferred just like their paper equivalents. This would give banks, corporates, and platforms a more secure and reliable legal framework for managing digital payment obligation.
Risk mitigation and legal clarity for digital trade players
For banks, fintechs, and platforms developing digital trade finance solutions, Article 12 could offer a clear legal foundation for using electronic records in both commercial and secured lending. These records could be treated as enforceable instruments for settlement, collateral and regulatory compliance – reducing legal uncertainty and transaction risk.
Buyers and sellers could also benefit from increased assurances that digital documents underpinning their trade flows would be legally recognised and enforceable legally. This would enhance trust in digitised processes and supports the shift toward more efficient, scalable digitised trade ecosystems.
Why it matters that New York led the way
The fact that this reform was driven by New York—rather than a federal body—is significant. As one of the most influential commercial jurisdictions in the world, New York law is frequently chosen to govern trade and finance contracts, particularly in cross-border transactions. If singed into law, its adoption of Article 12 is likely to serve as a benchmark for other U.S. states—and potentially other countries—in the continued development of digital trade law, especially in the absence of a unified federal framework in the U.S. It may also inform future federal approaches to digital assets and electronic trade documentation.
This step would reinforce New York’s role as a global legal standard-setter, strengthening its leadership in modernising trade law to meet the needs of an increasingly digital economy.
Still a long road ahead
While Article 12 would be a vital step forward, it won’t enable digital trade at scale on its own. Three major challenges remain:
- Cross-border recognition – Legal alignment with international frameworks is essential to ensure that electronic trade documents are recognised and enforceable across jurisdictions.
- Technical interoperability – Infrastructure must support seamless digital document exchange between different platforms, systems, and counterparties.
- Wider industry adoption – Legal clarity is necessary, but not sufficient. Broad adoption requires market confidence, operational readiness, and incentives for change.
Legal certainty is the foundation, but for digital trade to truly scale, legal, technical, and commercial systems must evolve in parallel.