Brooklyn Law Review


Since the founding of Bitcoin in 2009, digital assets, such as cryptocurrency, have exploded in popularity. Cryptocurrency has been associated with stories of immense profit and immense loss. The lucky transactors have been able to capitalize on the price fluctuations of cryptocurrency, while the unlucky transactors became victims of the same volatility, losing tremendous amounts of money. The novelty and ingenuity of cryptocurrency has been coupled with mass confusion to transactors and regulators alike. These early days of cryptocurrency have been characterized by a sort of regulatory tug of war that is a direct result of confusion of what cryptocurrency is and whether it can be woven into the existing lending framework with respect to secured transactions. This note explores the current attempts to weave cryptocurrency into secured lending practices, which have traditionally been governed under Uniform Commercial Code Article 9. However, it is clear that digital assets and cryptocurrency do not fit seamlessly into these existing mechanisms. Therefore, this note proposes that cryptocurrency should be classified and regulated using a combination of existing ideas and practices that remain cognizant of the asset’s differences and novelty. It specifically proposes that it should be categorized under Article 12 of the UCC and that the Securities and Exchange Commission and Commodity Futures Trading Commission should jointly create a Self-Regulatory Organization to regulate it.