🔒First major overhaul in decades modernizes CT’s business transaction laws for digital assets

A lot has changed in commerce since 2001. From the debut of the iPhone to the rise of mobile banking, ecommerce, cryptocurrency and nonfungible tokens (NFTs), business and personal transactions in today’s economy look far different than they did nearly 25 years ago. And yet, the laws regulating those transactions and assets have not kept pace with changes in technology. The state General Assembly, though, approved legislation during the 2025 session to address this issue. House Bill 6970 was approved by the Senate and House, and then signed into law by Gov. Ned Lamont on July 8. It makes major changes to the state’s Uniform Commercial Code (UCC), a set of rules adopted by all U.S. states and territories to provide uniform laws to govern most major business transactions. While each state’s version contains subtle differences, the UCC has been in place for more than 60 years. The bill passed by the Connecticut legislature this year provided the first comprehensive update to the state’s commercial codes since 2001, according to state officials and legal experts. It makes changes to every section of the UCC and adds a new one. For example, it broadens the UCC’s definition of a signature so it clearly covers electronic signatures for business transactions. It also adds biometrics, sounds and symbols as recognized security measures for fund transfers. However, the most significant changes are found in Article 9, which now recognizes digital assets as property that can be held, bought and sold, and in the newly introduced Article 12, which defines a new category of digital assets called “controllable electronic records.” All the changes in the 166-page law are the result of several years of work, not only by state legislators, but also by members of the Connecticut Bar Association and Uniform Law Commission, a national group of academics, senior attorneys and experts. While the UCC revision law is lengthy and complex, it’s also arguably one of the most important pieces of legislation approved by the General Assembly in 2025. “This is probably some of the most pro-business legislation, and some of the most heavily vetted legislation that we saw this year,” Rep. Jack Fazzino (D-Meriden), vice chair of the Judiciary Committee, told the Hartford Business Journal. A review of the code’s history and a look at the changes approved by the state legislature support that assessment.

The ‘backbone’

Thomas J. Welsh — an attorney and counsel at law firm Updike, Kelly & Spellacy P.C., which has offices in Hartford, Middletown and New Haven — is a member of the Connecticut Law Revision Commission. He has spent decades helping to fine-tune the UCC, including serving as co-chair of an advisory committee that made smaller-scale revisions to the commercial codes in 2010. He’s written books on the subject, and has been honored by the General Assembly for his efforts. “The Uniform Commercial Code is one of the most important sets of laws in the United States,” Welsh said. First adopted in the 1950s and ’60s, the UCC establishes uniform rules for common commercial transactions, he said — from buying, leasing and selling goods to governing electronic payments, negotiable instruments and bank deposits. “Basically, it’s the backbone of all commercial business transactions in the United States,” Welsh said. The model for each state’s UCC is developed by the Uniform Law Commission, an association composed of over 300 individuals nominated from each state, including members of the American Law Institute, of which Welsh is a member. He said creating the UCC and having it adopted by each state and territory was “actually easier and better” than to try to get an act of Congress. “We don’t need any culture wars over commercial transactions,” he quipped. Still, he acknowledges that each state makes “little tweaks” to the UCC “to fit into their systems.” The latest changes made by Connecticut have now been enacted by 32 states, Welsh said. Six other states — Maryland, Massachusetts, New York, Ohio, South Carolina and Texas — have bills pending to adopt the revisions, he added.

‘Technology neutral’

Work on the latest revisions has been going on for years, and incorporated feedback from various groups, including the Connecticut Bar Association, Connecticut Bankers Association and Uniform Law Commission. The law creates a new Article 12 covering “controllable electronic records” — a category that includes cryptocurrency, NFTs and other digital assets with embedded payment rights. It sets rules for how these assets can be bought, sold and used as loan collateral, including how to obtain “control” and how purchaser rights are protected. “The digital world has completely redefined what can carry value in the commercial world,” Fazzino said. “Things that didn’t exist even 10 years ago are now some of the most valuable assets in the commercial world.” Article 12, he added, “is important because it defines what those new assets are, and also how they can be used in commercial deals.” The revised Article 9 aligns UCC security-interest rules with the new Article 12, adding provisions for pledging digital assets as loan collateral, distinguishing between electronic and physical money, and establishing a new method for controlling deposit accounts, among other changes. The key to drafting updated code to regulate digital assets was to make it “technology neutral,” Welsh said. “They realized that you can’t constrain the technology,” he said. During his explanation of the bill on the House floor, Fazzino also addressed that point, saying someone looking at the language may find it especially vague. “It’s supposed to be,” he said, adding that the definitions are “written in such a way that, if the technology changes for these specific assets, the law can evolve along with it.”

Creating certainty

Fazzino, an attorney who focuses on commercial law, said the ultimate goal of the UCC is not just uniformity, but certainty. “In these situations, you have secured lenders, very sophisticated commercial actors with transactions that have potentially millions or even billions of dollars of collateral at stake,” he said. “You want to make sure there are very clear laws governing how that collateral is securitized, and how that collateral is used in commercial transactions.” Welsh added that the UCC update is especially important for small and midsize businesses. “The big guys are always going to figure a way around,” he said. “The small folks, consumers and small businesses, they rely upon this and if we didn’t do this, we really would have failed them.”