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.
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.