By: Donald L Swanson
Amendments to the Uniform Commercial Code are receiving widespread acceptance in a large number of state legislatures, across party lines and as an apolitical and nonpartisan piece of legislation.
That’s as intended and expected.
Apparently, there is a newly-found concern that the definition of “money” in these Amendments does three things:
- limits the use of electronic currency;
- allows for greater government tracking of electronic currency; and
- allows for a government-backed electronic currency.
I’ve gotta say: those concerns are a surprise. Didn’t see that coming.
Rules of the Road
The Uniform Commercial Code (“UCC”) is nothing more than rules of the road for business transactions. It is, literally, the business traffic equivalent of rules of the road for driving a car.
The definition of “money” in both the current version and Amendments to the UCC has the primary purpose of declaring how security interests in “money” and in electronic currencies are to be perfected: i.e., by the secured party’s possession, filing or control.
There is no broader scheme or intent involved.
The triggering point here, I believe, is the very idea of defining “money.”
There’s a history.
That history is highly significant in farming communities . . . going back to the 1980s Farm Crisis. That Crisis saw a depopulation of the countryside and removal (sometimes voluntary, but many times not) of many, many people from their multi-generation farms and homes.
Unfortunately, back then, self-proclaimed legal experts circulate a legal theory that is convoluted and difficult to understand but has an aura of grandeur for those unfamiliar with the law.
The theory makes profligate use of words like “specie” and “legal tender” and “common law,” concluding with a punch line something like this:
- You don’t have to repay your loans with real money.
For peddlers like that, the very idea of a new and unusual form of money that’s outside the old system, like crypto currency, would be manna from heaven. And any attempt by any legislature to define the word “money” would be red meat.
I lived that time and that theory as a young bankruptcy attorney.
In fact, I was sued under that theory: for $11.3 million (I always wondered how they came up with the specific $.3). They even notified the IRS that I received income of $11.3 million.
But as it turns out . . . I was actually flattered by all this. That’s because I was one of many, many defendants. Other defendants included a couple federal judges, some U.S. marshals, and a variety of other dignitaries. The honor-by-association of my name with those dignitaries was pretty cool for little ol’ me back then.
And I didn’t have to do anything by way of defense—the U.S. Attorney’s office took care of it all, as I recall.
Back to the UCC Amendments:
- It’s unfortunate to see that old “money” idea resurrected in today’s world; and
- Its particularly unfortunate to see it gumming up a perfectly good and benign law that has nothing to do with any conspiracy or nefarious plan.
** If you find this article of value, please feel free to share. If you’d like to discuss, let me know.
Sooo! ! It seems “money” is changing! !