The Oklahoma Bar Journal January 2023

with the amendments to Article 9, facilitates the use of controllable electronic records as collateral for loans and credit sales. Under the present version of Article 9, there is no effective method for a creditor to perfect or ensure the priority of its security interest in digital assets. Section 12-105 establishes what it means to “control” a controllable electronic record, which generally is the power to transfer the con trollable electronic record, prevent others from using the controllable electronic record and be positively identifiable in some manner, such as the use of a cryptographic key. In conjunction with the proposed amendments to Article 9, a secured party with “control” of controllable electronic records will have a per fected security interest with priority over the interests of other creditors who do not have “control.” Section 12-106 deals with con trollable electronic records that represent a right to payment (spe cifically, a controllable account or a controllable payment intangible), such as an electronic promissory note, and provides that the person having control of the controllable

governs. Also, an Article 12 trans action is subject to a different rule for consumers, if any, such as a rule under the Uniform Consumer Credit Code or the Consumer Protection Act. Section 12-104 establishes the rights acquired by a transferee of a controllable electronic record, including whether a transferee takes free of third-party claims. Specifically, if the transferee of a controllable electronic record is a “qualifying purchaser,” the trans feree acquires its interest free from any competing property claims to the controllable electronic record. A “qualifying purchaser” is a pur chaser that obtains control of the controllable electronic record for value, in good faith and without notice of a property claim to the controllable electronic record. These provisions are consistent with pro visions in other articles of the UCC that protect innocent parties acquir ing an interest in property, such as negotiable instruments. Section 12-105 introduces the concept of “control” as it applies to controllable electronic records. Thus, Section 12-105, in conjunction

Amended Section 9-619 provides conforming changes as to terminology or section references. Amended Section 9-620 provides conforming changes as to terminology or section references. Amended Section 9-621 provides conforming changes as to terminology or section references. Amended Section 9-624 provides conforming changes as to terminology or section references. Amended Section 9-628

provides that, as with amended Section 9-605, the secured party owes no obligation to an unidenti fied debtor or obligor. The amendment adds a duty to unidentified debtors or obligors when the secured party knows the identifying information is missing from the record.

ARTICLE 12

The new Article 12 adds a new article to the uniform text of the UCC in response to concerns about the lack of clear commercial law rules relating to digital assets. Article 12 does not adversely impact existing Oklahoma law and instead provides much-needed clarity surrounding a new category of assets referred to as “controllable electronic records,” which includes cryptocurrency (such as bitcoin and ethereum), non-fungible tokens and other electronic payment rights. Section 12-102 creates a new definition of a “controllable elec tronic record,” which is a record stored in an electronic medium that can be subjected to control under the new Section 12-105. Section 12-103 provides that if there is a conflict between Article 12 and Article 9 of the UCC, Article 9

32 | JANUARY 2023

THE OKLAHOMA BAR JOURNAL