Wisconsin’s Commercial Code Is Missing Its Digital-Assets Chapter

Every state has a Uniform Commercial Code, and most of us have no reason to think about it. It’s the plainest law on the books. It settles who owns what once a sale closes, who gets paid first when a borrower defaults, and who bears the loss when two people both believe an asset is theirs. Wisconsin has had one since 1963, and it works well enough that we never discuss it.

The code is a model text. Two nonpartisan legal bodies write it, the American Law Institute and the Uniform Law Commission, and it becomes law in a state only once that state’s legislature adopts it. In 2022 those two bodies added a section covering digital assets: cryptocurrency, tokens, and the like.

Thirty-six states and the District of Columbia have adopted that update. Ohio finished last month, effective October 6. Bills are pending in four more states.

We’ve never introduced it. Not once in four years.

A word on the numbers, because there are several and they are easier than they look.

The model code is organized into articles. We adopt each article as a statute chapter and add 400 to the number, so Article 2 on sales is our chapter 402, and Article 9 on secured transactions is our chapter 409. The 2022 update created a new Article 12 for digital assets, which here would be chapter 412.

Our commercial code currently runs to chapter 411, on leases, and stops there.

Article 12 starts by naming the thing it covers: a controllable electronic record, meaning a digital asset that a person can genuinely hold and hand to someone else. It then answers three questions our law leaves us to argue by analogy.

First, what it means to control something nobody can physically hold. You control a digital asset if you can be identified as its holder, whether by name, account number, cryptographic key, or wallet. Control does the work possession does for a physical object.

Second, what a lender has to do to take that asset as collateral. Ordinarily they file paperwork with the state. Article 12 lets them secure it by holding it instead.

Third, what happens when you buy an asset that turns out to be encumbered. A buyer who takes control in good faith, for value, and without notice that anyone else has a claim takes it clean. That’s the take-free rule, and it works roughly the way cash does.

None of it is exotic. It’s the same job our code already does for grain and machinery.

In Briefing 001 I wrote that we legislate digital assets by reaction, not by design. We act decisively when we’re handed a national template to adopt or a documented harm to answer, and we hesitate when the task is deciding for ourselves what kind of home we want to be for this industry.

The record mostly bears that out. We modernized how money moves (2023 Act 267) and licensed virtual-currency kiosks (2025 Act 226) after a documented surge in scams, many of them against neighbors over sixty. Both were the right calls. Both were also handed to us.

The 2022 update is the part that doesn’t fit, because a uniform act is about as close to a national template as American law gets. We took the money-transmission one and skipped this one.

The difference, I think, is the second half of that test. The money-transmission update had a regulator with a problem and an industry asking for clarity. The kiosk law had victims a reporter could name and a dollar figure a legislator could cite. Article 12 has neither yet. It heads off a kind of dispute that hasn’t visibly surfaced here, and we’ve always waited for a harm somebody has counted.

It also isn’t that we avoid the commercial code. We repealed an entire chapter of it in 2009 (Act 110), the one covering bulk transfers, once it had outlived its use.¹ We open the code when somebody brings a reason. Nobody has brought one for this.

Article 12 has a drafting flaw, and I’d be selling you something if I left it out.

David Frisch and Nicole Dalrymple, writing in the Texas A&M Law Review, support adding Article 12. Their objection is to a single word inside it.²

The take-free rule protects what the statute calls a “qualifying purchaser.” The drafters said they meant that to include someone who buys an asset several steps downstream of a thief. But “purchaser” already carries a settled meaning in the code: you have to acquire through a transaction that creates a property interest, and a thief has no property interest to pass along. So the person the drafters described as protected may not be reached by the word they chose. Frisch and Dalrymple say they raised it with the drafters, it went unfixed, and courts will now spend years resolving what a better word would have settled.

That’s an argument for adopting carefully. A state taking up a model act can take it up with a fix, and catching this sort of thing is exactly what a study committee is for.

For four years we had nowhere to put this question. That changed this month.

The Joint Legislative Council has directed a Study Committee on Cryptocurrency, chaired by Senator Rob Stafsholt with Representative Nate Gustafson as vice chair. Its charge is staking and whether our securities laws should reach it, with room to review other uses of cryptocurrency and recommend legislation. On August 11 the Council’s nonpartisan staff published a brief introducing members to the subject, and it walks through the digital-assets chapter in roughly the terms I just used.³ The committee holds its first meeting tomorrow, ten in the morning until a quarter to three, in Room 412 East of the State Capitol. The room number is a coincidence.

I want to be accurate about what tomorrow is, because it would be easy to oversell. Article 12 isn’t on the agenda as an action item. Tomorrow is organizational: roll call, opening remarks, introductions, then presentations from a University of Wisconsin law clinic, the Division of Securities at the Department of Financial Institutions, the Wisconsin Credit Union League, and the Wisconsin Bankers Association.⁴ The committee doesn’t meet again until October 15.

Two things about that day still matter.

The first is a footnote in the staff brief. Thirty-six states and the District of Columbia have enacted the update, bills are pending in four more, and in ten states no action has been taken. Wisconsin is named on that list, by its own Legislature’s staff, in a document written for the committee that could change it.

The second is who’s in the room. Uniform code updates don’t arrive on their own. They ride in on somebody, usually a bar association section or a lender with a problem. Tomorrow afternoon the bankers and the credit unions have the floor, and the committee then holds a roundtable on members’ priorities for the study, scheduled for around 1:40. That roundtable is where a committee decides what it’s actually going to work on. The people who’d benefit most from a chapter 412 will be sitting right there while that list gets written.

Study committees seat citizen members alongside legislators, they’re directed to recommend legislation on major policy questions, and their meetings are open to the public.

I should tell you where I sit. My work in digital-asset policy began in music, where ownership is everything and the cost of leaving it undefined is learned early. I’ve spent time in committee rooms on these questions. This can fairly be read as coming from an interested party, and I’d rather say so than have a reader find it out.

So I’m not going to tell you Wisconsin should pass Article 12. That call belongs to the people who’ll read the whole act, hear from everyone it would bind, and decide what to do about the drafting problem.

What I’d ask is smaller. If you lend here, bank here, or practice commercial law here, watch what makes the priority list tomorrow afternoon. If this gap has cost you something, say so while the list is still being written. The staff brief is public and it’s eighteen pages.

In a briefing last week I noted that Wisconsin’s law of likeness has moved twice in forty-nine years, and both times because the University of Wisconsin needed it to. The point was about who has someone in Madison able to ask on their behalf, which the university does and a working musician doesn’t.

For four years, chapter 412 had nobody to carry it. Tomorrow morning, for the first time, everyone who could is in the same room.

For the state-level picture behind this, see my briefings at mjsterling.org.