Also known as:electronic currencies · e-currency · electronic money
Written by attorneys · grounded in primary & secondary sources — see below
Money existing solely in electronic records rather than as physical currency or deposit accounts. Under the Uniform Commercial Code a security interest in electronic money may be perfected only by control and remains perfected only while the secured party retains control.
Sources & Authorities· 8 primary sources
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Uniform Acts
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How it applies
Common Examples
2
Control Agreement Secures Electronic Funds
Edith Eberhardt borrowed from Elite Dynamics and granted a security interest in electronic money held in a digital wallet. Elite Dynamics entered a control agreement with the wallet provider that gave it exclusive power to direct transfers. The security interest attached and became perfected the moment control was obtained.
Loss of Control Ends Perfection
Emma Erickson granted Eastern Electric a security interest in electronic money stored on a payment platform. Eastern Electric obtained control through a tri-party agreement and the interest was perfected. When Emma changed the platform credentials without notice, Eastern Electric lost the ability to direct the funds and perfection lapsed.
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Practice Questions3
Common questions
Frequently Asked
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How is a security interest in electronic money perfected?+
A security interest in electronic money may be perfected only by control under Section 9-314. Filing a financing statement is not an available method.
Supporting sources
When does perfection by control of electronic money begin and end?+
Perfection begins when the secured party obtains control and continues only while the secured party retains control.
Supporting sources
What happens to a transferee who obtains control of electronic money?+
A transferee of electronic money takes the money free of a security interest if the transferee obtains control without colluding with the debtor to violate the secured party's rights.
Supporting sources
Secured TransactionsRights of third parties; perfected and unperfected security interests; rules of priority (§ 9-301, et seq.) · Requirement of filing and steps to be taken for perfection (§§ 9-308 through 9-316; § 9-501, et seq.); assignment of security interest (§§ 9-514, 9-519)UBEFoundational