10/07/26

Ohio entered a new era of commercial law on October 6, when House Bill 195 took effect. The legislation updates Ohio’s Uniform Commercial Code to address digital assets and other forms of electronic commerce that did not fit neatly within rules written for traditional property and paper-based transactions.

At the center of the law is a new category of property known as a “controllable electronic record.” That category can include certain digital assets, although the law is broader than cryptocurrency. It establishes rules for determining who has control of an electronic record, what rights transfer with it and when a purchaser can acquire those rights free from competing property claims.

The law also updates Ohio’s secured-transactions rules. For banks, that means greater clarity about how a security interest in qualifying electronic collateral may be perfected, how priority is determined and which jurisdiction’s law governs a transaction.

This matters because commercial lending depends on clear answers to basic questions: What does the borrower own? Can it serve as collateral? How does the bank establish and protect its interest? What happens if the asset is transferred or the borrower defaults? Ohio’s previous law did not always provide reliable answers when the property existed entirely in electronic form.

Banks do not need to enter the cryptocurrency business because of HB 195. They should, however, be prepared for digital assets and electronically evidenced payment rights to appear in loan applications, business acquisitions and other commercial transactions.

Institutions may want to review their loan documents, collateral questionnaires, security agreements and escalation procedures. When electronic assets are involved, counsel should determine whether the property qualifies as a controllable electronic record, how control can be demonstrated and whether perfection should be achieved through filing, control or both. Relationships with custodians and technology providers may also require closer examination.

The practical takeaway is straightforward: Ohio law now provides clearer rules for electronic collateral. Banks do not need to overhaul their operations overnight, but they should know when these rules apply and when a transaction needs additional legal review.