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Publication Date

2018

Abstract

Bitcoin is still here. The price of Bitcoin rebounded-
setting a record high of $19,783.21 per Bitcoin in
December 2017 before dropping to a price of $8,690 per
Bitcoin as of March 22, 2018. Moreover, legal and
regulatory developments, like New York's BitLicense and
federal taxation of virtual currency as property, can be
viewed as legitimizing its use. The normalization of
virtual currency is evidenced by its increasingly
mainstream applications. Virtual currency can be used
as a faster and lower cost method of transferringfunds
domestically and internationally. A growing number of
retailers now accept virtual currency as a method of
payment. In addition, more and more investors are
trying to capitalize on the price volatility of virtual
currency by buying and selling it as a speculative
investment. Recognizing the potential of this growing
market of users, investment in virtual currency
businesses and startups has also risen. Even traditional
financial institutions and the New York Stock Exchange
have invested-participating in a funding round for
Coinbase that raised $75 million dollars.
Putting aside the normative question of whether the
normalization of virtual currency is desirable, an
inescapable truth remains. Virtual currency is a
present reality. It has the potential to disrupt a range
of traditional industries and implicate a host of legal
issues. But to date, the legal and regulatory treatment
of virtual currency has been limited. Developments in

virtual currency law have focused almost exclusively on
virtual currency in the context of money transmission
and the twin regulatory objectives of crime prevention
and consumer protection.
Outside of this space, the discussion about and
implementation of an appropriate legal framework is
relatively undeveloped. Secured transactions are a
prime example of a significant commercial practice that
is currently being affected by virtual currency-
specifically, the use of virtual currency as collateral. It
is increasingly likely that debtors, both individuals and
organizational,will hold virtual currency. Because of
this, creditors must now deal with the realities of
ensuring that they have attached, perfected and have
priority over a debtor's virtual currency. If creditors
are unable to navigate this process, they risk losing out
on the monetary value of the virtual currency upon a
debtor default. Unfortunately, the Uniform
Commercial Code was not drafted with virtual
currency in mind and it has not been optimized in any
way to expressly account for it. Therefore, those
engaged in secured transactions are in the position of
having to evaluate and interpret how the existing
provisions of the Uniform Commercial Code might
apply to virtual currency.
This Article expands the conversation by pushing
beyond the confines of current developments in virtual
currency law and regulation. In doing so, it considers
broader commercial law implications of virtual
currency. Specifically, this Article provides a solution
for the present and future of virtual currency collateral
under Article 9 of the Uniform Commercial Code. This
Article sets forth a roadmap for dealing with the
uncertainties of virtual currency collateral under
Article 9 as it exists today. In addition, it advances a
framework for optimizing Article 9 for virtual currency
collateral by recognizing it as a distinct collateral type
and creating special rules based on the concept of
"control" which already applies to other collateral

types. Since U.S. policymakers have already opted to
accommodate (rather than ban) virtual currency, this
Article seeks to ensure that the discussion does not
overlook the commercial law implications of virtual
currency. In doing so, this Article highlights the
importance of and advances the development of a
comprehensive and appropriately-scaled set of laws
and regulations applicable to virtual currency in the
United States.

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