Navigating UCC Article 12 and AML Compliance in Blockchain Law
As digital assets like cryptocurrencies and NFTs continue to increase in popularity, legal professionals must stay ahead of emerging regulations. One of the most important legal developments in this space is the adoption of UCC Article 12, which governs secured financing using digital assets. Additionally, anti-money laundering (AML) regulations are a critical concern for those dealing with blockchain-based transactions.
What Is UCC Article 12?
Jeonghoon Ha, an expert in blockchain law, founder of Ha Law PLLC, and the instructor of SproutEd CLE’s course A Legal Guide to Blockchain and NFTs, highlights the importance of staying informed about UCC Article 12. According to Ha:
"States in the US are in the process of adopting an amendment to Uniform Commercial Code (UCC) that would incorporate new UCC Article 12. It governs secured financing using digital assets, including cryptocurrencies and NFTs. As of January 2025, 25 states enacted this new article as their law and 4 states, including New York, have a pending bill."
What does this mean for attorneys? If your clients are engaging in secured financing using digital assets, you must ensure they conduct due diligence on asset valuation and understand their rights concerning collateralized digital assets. Failure to do so can result in compliance risks and financial disputes. For an overview of how UCC laws impact digital assets, reputable sources like the Uniform Law Commission (ULC) provide up-to-date information on state adoptions of UCC amendments.
AML Compliance in the Digital Asset Industry
Another key regulatory challenge in the blockchain space is anti-money laundering (AML) compliance. As Ha explains:
"If you're in the digital asset industry, anti-money laundering (AML) regulations are very important. As you take steps to comply with AML regulations, keep these three acronyms in mind: Know Your Self (KYS), Know Your Customer (KYC), and Know Your Transaction (KYT)."
Regulators worldwide, including FinCEN (Financial Crimes Enforcement Network), emphasize the necessity of KYC and KYT measures to detect and prevent illicit activities involving digital assets. Law firms and financial institutions must implement robust AML protocols to avoid regulatory penalties and reputational damage.
Why Attorneys Should Stay Ahead of Blockchain Regulations
As blockchain tech continues to evolve, attorneys must be well-versed in its legal implications. Whether advising clients on secured transactions under UCC Article 12 or ensuring AML compliance, lawyers play a crucial role in navigating this constantly changing landscape.
Fortunately for you, Jeonghoon Ha has partnered with SproutEd CLE for an in-depth 1 hour / 1 CLE credit course, “A Legal Guide to Blockchain and NFTs”. This course equips attorneys with the knowledge needed to confidently counsel clients on digital asset regulations, compliance strategies, and emerging legal frameworks.
Earn Continuing Legal Education credits while staying ahead of the curve—Enroll in Jeonghoon’s course today!
