Big Picture
Ohio has modernized its Uniform Commercial Code (“UCC”) to address digital assets like cryptocurrency and NFTs. House Bill 195 (“HB 195”) adds a new Article 12 to the Ohio UCC that aligns the state with 2022 amendments by the Uniform Law Commission and American Law Institute. Additionally, HB 195 updates Article 9, establishing defined rules for owning, transferring, and using digital assets as collateral. The law was signed on July 7, 2026, and just recently took effect on October 6, 2026. HB 195 includes a one‑year transition period through October 6, 2027.
What is New Under Article 12?
Controllable Electronic Records (“CER”)
The centerpiece of Article 12 is a new category for “controllable electronic records” (“CERs”) that cover cryptocurrency, NFTs, and similar digital assets. A CER is an electronic record that someone can “control,” and the definition is broad enough to cover common blockchain‑based assets like cryptocurrency and NFTs. The Ohio UCC also introduces concepts for “controllable accounts” and “controllable payment intangibles,” which are payment rights evidenced by a CER where the debtor agrees to pay the person in control.
Control Definition
To understand Article 12 fully, understanding what constitutes “control” is vital. Under Article 12, “control” is the digital version of possession. A party has “control” when that party has the power to use substantially all the benefits of the CER, prevent others from using those benefits, and transfer “control” to someone else exclusively. Importantly, the party in “control” must be readily identifiable. The rules are technology‑neutral, meaning that “control” can be evidenced by private keys, exclusive signing authority on a blockchain, or custodial and multi‑signature arrangements.
Qualifying Purchaser Protection
Additionally, the new Article 12 adds protection for “qualifying purchasers.” A “qualifying purchaser” is a party that obtains control of a CER for value, in good faith, and without notice of any property claim. Qualifying purchasers take the CER free of any competing property claims. Importantly, under Article 12, a financing statement itself does not count as notice, as there must also be the element of control. Traditionally, a financing statement under Article 9 provided notice and protected creditors through establishing the creditor’s priority position over subsequent lenders, buyers, or competing creditors who try to claim the same collateral later.
Updates to Article 9
Perfection by Filing or Control
For secured lending, the biggest change is how interests are perfected and prioritized. Under the revised Article 9, a lender can perfect a security interest in CERs, controllable accounts, and controllable payment intangibles by filing or control. Priority generally favors the party with control over a party who only filed in situations where multiple parties claim control.
No Need to Rewrite Your Security Agreements
Borrowers and lenders generally will not need to rewrite security agreements just to track the new terminology. Categories of collateral changes were minimal as CERs remain “general intangibles,” controllable accounts remain “accounts,” and controllable payment intangibles remain “payment intangibles.” Therefore, typical collateral descriptions and filings generally still fit. What changes is that control now provides a powerful and often decisive path to priority.
Timing is Key
Security interests that are perfected immediately before October 6, 2026 (the “Effective Date”), will generally remain perfected, but some may require action to stay perfected under the new rules. The “adjustment date” of October 6, 2027, is the key deadline to update attachment and perfection steps. After the adjustment date, enforceability and priority depend on meeting the revised requirements at O.R.C. § 1309.203, and priority can shift toward parties who have obtained control if those requirements are not met. After‑acquired collateral is also affected, since control (and therefore priority) may not be established until acquisition occurs.
For security interests perfected immediately beforethe Effective Date, the security interests remain perfected if the revised requirements are already satisfied. If the requirements are not satisfied, then the security interest only remains perfected until the adjustment date, unless the revised rules for perfection are met before that date. For security interests that were enforceable but unperfected on the Effective Date, such interests remain enforceable until the adjustment date. These security interests may be perfected when the revised rules for perfection are met anytime during the transition period.
Going Forward
For lenders, the next step is to identify current and expected digital‑asset collateral, including CERs and related payment rights, and confirm how to perfect that collateral. Lenders should also think about creating documentation of control to evidence exclusive control when needed. Finally, lenders should update credit documents with control‑related covenants, deliverables, and agreed verification methods for transfer notices and proofs.
Borrowers should evaluate whether their digital assets can support financing under this clearer framework and what operational steps are needed to allow a lender to establish control.
Ohio’s adoption of Article 12 gives a practical, technology‑neutral framework for treating digital assets as collateral, clarifies who has priority, and protects good‑faith purchasers. Acting early to implement control‑based practices will position both lenders and borrowers to benefit from the new rules through the transition period.
For more information or to seek counsel from our Banking & Finance practice group, please reach out to request a consultation or call us at 216-696-1422.
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This information is provided for general informational purposes only and should not be construed as legal advice. Readers should consult with qualified legal counsel regarding their specific circumstances before taking any action based on the information presented.
