LB 649 (2021) — Nebraska Financial Innovation Act (digital asset depositories), slip law
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Research, not advice. Part of the Bitcoin research archive (October 2026). Claims labelled unverified, contested or fringe are reported, not endorsed; statuses of bills and rules are as of the date checked. Government, court and patent records are public domain; the research notes are CC BY 4.0.
LB649 LB649
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LEGISLATIVE BILL 649
Approved by the Governor May 25, 2021
Introduced by Flood, 19; Vargas, 7; Blood, 3; Lindstrom, 18.
A BILL FOR AN ACT relating to banking and finance; to amend section 8-115,
Reissue Revised Statutes of Nebraska, sections 8-101.02, 8-101.03, 8-102,
8-113, 8-148.09, 8-1,140, 8-601, 8-602, 8-701, 8-702, 8-1120, and 8-2724,
Revised Statutes Cumulative Supplement, 2020, and sections 1-201, 9-102,
9-301, 9-310, 9-312, 9-314, 9-331, and 9-406, Uniform Commercial Code,
Reissue Revised Statutes of Nebraska; to adopt the Nebraska Financial
Innovation Act; to authorize digital asset depository entities and provide
for the charter, operation, supervision, and regulation of such entities;
to transfer funds; to adopt Uniform Commercial Code provisions on
controllable electronic records; to harmonize provisions; to provide
operative dates; and to repeal the original sections.
Be it enacted by the people of the State of Nebraska,
Section 1. Sections 1 to 31 of this act shall be known and may be cited
as the Nebraska Financial Innovation Act.
Sec. 2. The Legislature finds and declares that:
(1) Economic development initiatives demand buy-in and input from
community stakeholders across multiple industries. The Legislature should send
a strong message that Nebraska wants to bring high-tech jobs and digital asset
operations to our state. Nebraska has an incredible opportunity to be a leader
in this emerging technology;
(2) Nebraska desires to create an entrepreneurial ecosystem where young
talent can be paired with private investors in order to create jobs, enhance
our quality of life, and prevent the brain drain that is particularly acute in
rural Nebraska. If Nebraska does not make intentional and meaningful changes to
how it recruits and retains young people, Nebraska will be left behind;
(3) The rapid innovation of blockchain and digital ledger technology,
including the growing use of virtual currency, digital assets, and other
controllable electronic records has complicated the development of blockchain
services and products in the marketplace;
(4) Blockchain innovators are able and willing to address banking
compliance challenges such as federal customer identification, anti-money
laundering, and beneficial ownership requirements to comply with regulators'
concerns;
(5) Compliance with federal and state laws, including, but not limited to,
know-your-customer and anti-money-laundering rules and the federal Bank Secrecy
Act, is critical to ensuring the future growth and reputation of the blockchain
and technology industries as a whole; and
(6) Authorizing digital asset depositories in Nebraska will provide a
necessary and valuable service to blockchain innovators and customers,
emphasize Nebraska's partnership with the technology and financial industry,
safely grow this state's ever-evolving financial sector, and afford more
opportunities for Nebraska residents.
Sec. 3. For purposes of the Nebraska Financial Innovation Act:
(1) Blockchain means a distributed digital record of controllable
electronic record transactions;
(2) Centralized finance means centralized digital asset exchanges,
businesses, or organizations with a valid physical address;
(3) Control has the following meaning:
(a) A person has control of a controllable electronic record if:
(i) The following conditions are met:
(A) The controllable electronic record or the system in which it is
recorded, if any, gives the person:
(I) The power to derive substantially all the benefit from the
controllable electronic record;
(II) Subject to subdivision (b) of this subdivision, the exclusive power
to prevent others from deriving substantially all the benefit from the
controllable electronic record; and
(III) Subject to subdivision (b) of this subdivision, the exclusive power
to transfer control of the controllable electronic record to another person or
cause another person to obtain control of a controllable electronic record that
derives from the controllable electronic record; and
(B) The controllable electronic record, a record attached to or logically
associated with the controllable electronic record, or the system in which the
controllable electronic record is recorded, if any, enables the person to
readily identify itself as having the powers specified in subdivision (a)(i) of
this subdivision; or
(ii) Another person obtains control of the controllable electronic record
on behalf of the person, or having previously obtained control of the
controllable electronic record, acknowledges that it has control on behalf of
the person.
(b) A power specified in subdivisions (3)(a)(i)(A)(II) or (III) of this
section can be exclusive, even if:
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(i) The controllable electronic record or the system in which it is
recorded, if any, limits the use to which the controllable electronic record
may be put or has protocols that are programmed to result in a transfer of
control; and
(ii) The person has agreed to share the power with another person.
(c) For the purposes of subdivision (3)(a)(i)(B) of this section, a person
may be identified in any way, including by name, identifying number,
cryptographic key, office, or account number;
(4) Controllable electronic borrowing means the act of receiving digital
assets or the use of digital assets from a lender in exchange for the payment
to the lender of digital assets, interest, fees, or rewards;
(5) Controllable electronic record means an electronic record that can be
subjected to control. The term has the same meaning as digital asset and does
not include electronic chattel paper, electronic documents, investment
property, and transferable records under the Uniform Electronic Transactions
Act;
(6) Controllable electronic record exchange means a business that allows
customers to purchase, sell, convert, send, receive, or trade digital assets
for other digital assets;
(7) Controllable electronic record lending means the act of providing
digital assets to a borrower in exchange for digital assets, interest, fees, or
rewards;
(8) Controllable electronic records staking means the act of pledging a
digital asset or token with an expectation of gaining digital assets, interest,
fees, or other rewards on such act;
(9) Customer means a digital asset depositor or digital asset account
holder;
(10) Decentralized finance means digital asset exchanges, businesses, or
organizations operating independently on blockchains;
(11) Department means the Department of Banking and Finance;
(12) Digital asset depository means a financial institution that securely
holds liquid assets when such assets are in the form of controllable electronic
records, either as a corporation organized, chartered, and operated pursuant to
the Nebraska Financial Innovation Act as a digital asset depository institution
or a financial institution operating a digital asset depository business as a
digital asset depository department under a grant of authority by the director;
(13) Digital asset depository department means a financial institution
operating a digital asset depository business as a digital asset depository
department under a grant of authority by the director;
(14) Digital asset depository institution means a corporation operating a
digital asset depository business organized and chartered pursuant to the
Nebraska Financial Innovation Act;
(15) Director means the Director of Banking and Finance;
(16) Financial institution means a bank, savings bank, building and loan
association, savings and loan association, whether chartered by the United
States, the department, or a foreign state agency; or a trust company;
(17) Fork means a change to the protocol of a blockchain network;
(18) Independent node verification network means a shared electronic data
base where copies of the same information are stored on multiple computers; and
(19) Stablecoin means a cryptocurrency designed to have a stable value
that is backed by a reserve asset.
Sec. 4. The director shall have the power to issue to corporations
desiring to transact business as a digital asset depository institution
charters of authority to transact digital asset depository business as defined
in the Nebraska Financial Innovation Act. The director shall have general
supervision and control over such digital asset depositories.
Sec. 5. (1)(a) A digital asset depository may:
(i) Make contracts as a corporation under Nebraska law;
(ii) Sue and be sued;
(iii) Receive notes as permitted by federal law;
(iv) Carry on a nonlending digital asset banking business for customers,
consistent with subdivision (2)(b) of this section;
(v) Provide payment services upon the request of a customer; and
(vi) Make an application to become a member bank of the federal reserve
system.
(b) A digital asset depository shall maintain its main office and the
primary office of its chief executive officer in Nebraska.
(c) As otherwise authorized by this section, a digital asset depository
may conduct business with customers outside this state.
(2)(a) A digital asset depository institution, consistent with the
Nebraska Financial Innovation Act, shall be organized as a corporation under
the Nebraska Model Business Corporation Act to exercise the powers set forth in
subsection (1) of this section.
(b) A digital asset depository institution shall not accept demand
deposits of United States currency or United States currency that may be
accessed or withdrawn by check or similar means for payment to third parties
and except as otherwise provided in this subsection, a digital asset depository
institution shall not make any consumer loans for personal, property or
household purposes, mortgage loans, or commercial loans of any fiat currency
including, but not limited to, United States currency, including the provision
of temporary credit relating to overdrafts. Notwithstanding this prohibition
against fiat currency lending by a digital asset depository institution, a
digital asset depository institution may facilitate the provision of digital
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asset business services resulting from the interaction of customers with
centralized finance or decentralized finance platforms including, but not
limited to, controllable electronic record exchange, staking, controllable
electronic record lending, and controllable electronic record borrowing. A
digital asset depository institution may purchase debt obligations specified by
subdivision (2)(c) of section 9 of this act.
(c) Subject to the laws of the host state, a digital asset depository
institution may open a branch in another state in the manner set forth in
section 8-157 or 8-2303. A digital asset depository institution, including any
branch of the digital asset depository institution, may only accept digital
asset deposits or provide other digital asset business services under the
Nebraska Financial Innovation Act to individual customers or a customer that is
a legal entity other than a natural person engaged in a bona fide business
which is lawful under the laws of Nebraska, the laws of the host state if the
entity is headquartered in another state, and federal law.
(3) The deposit limitations of subdivision (2)(a)(ii) of section 8-157
shall not apply to a digital asset depository.
(4) Any United States currency coming into an account established by a
customer of a digital asset depository institution shall be held in a financial
institution, the deposits of which are insured by the Federal Deposit Insurance
Corporation, which maintained a main-chartered office in this state, any branch
thereof in this state, or any branch of the financial institution which
maintained the main-chartered office in this state prior to becoming a branch
of such financial institution.
(5) A digital asset depository institution shall establish and maintain
programs for compliance with the federal Bank Secrecy Act, in accordance with
12 C.F.R. 208.63, as the act and rule existed on January 1, 2021.
(6) A digital asset depository shall help meet the digital financial needs
of the communities in which it operates, consistent with safe and sound
operations, and shall maintain and update a public file and on any Internet web
site it maintains containing specific information about its efforts to meet
community needs, including:
(a) The collection and reporting of data;
(b) Its policies and procedures for accepting and responding to consumer
complaints; and
(c) Its efforts to assist with financial literacy or personal finance
programs to increase knowledge and skills of Nebraska students in areas such as
budgeting, credit, checking and savings accounts, loans, stocks, and insurance.
Sec. 6. A digital asset depository institution shall be subject to the
Interstate Branching and Merger Act, the Nebraska Bank Holding Company Act of
1995, and Chapter 8, articles 6, 8, 13, 14, 15, 16, 19, 20, 25, 26, and 29
unless otherwise limited or excluded or the context otherwise requires.
Sec. 7. (1) No customer shall open or maintain an account with a digital
asset depository or otherwise receive any services from the digital asset
depository unless the customer meets the criteria of this subsection. A
customer shall:
(a) Make sufficient evidence available to the digital asset depository to
enable compliance with anti-money laundering, customer identification, and
beneficial ownership requirements, as determined by the federal Bank Secrecy
Act guidance and the policies and practices of the institution; and
(b) If the customer is a legal entity other than a natural person:
(i) Be in good standing with the jurisdiction in the United States in
which it is incorporated or organized; and
(ii) Be engaged in a business that is lawful and bona fide in Nebraska, in
the host state, if applicable, and under federal law consistent with subsection
(3) of this section.
(2) A customer which meets the criteria of subsection (1) of this section
may be issued a digital asset depository account and otherwise receive services
from the digital asset depository, contingent on the availability of sufficient
insurance under subsection (5) of section 23 of this act.
(3) Consistent with subdivisions (1)(a)(iv) and (v) of section 5 of this
act, and in addition to any requirements specified by federal law, a digital
asset depository shall require that any potential customer that is a legal
entity other than a natural person provide reasonable evidence that the entity
is engaged in a business that is lawful and bona fide in Nebraska, in the host
state, and under federal law or is likely to open a lawful, bona fide business
within a federal Bank Secrecy Act compliant time frame, as the act existed on
January 1, 2021. For purposes of this subsection, reasonable evidence includes
business entity filings, articles of incorporation or organization, bylaws,
operating agreements, business plans, promotional materials, financing
agreements, or other evidence.
Sec. 8. The terms and conditions of a customer's digital asset depository
account at a digital asset depository shall be disclosed at the time the
customer contracts for a digital asset business service. Such disclosure shall
be full and complete, contain no material misrepresentations, be in readily
understandable language, and shall include, as appropriate and to the extent
applicable:
(1) A schedule of fees and charges the digital asset depository may
assess, the manner by which fees and charges will be calculated if they are not
set in advance and disclosed, and the timing of the fees and charges;
(2) A statement that the customer's digital asset depository account is
not protected by the Federal Deposit Insurance Corporation;
(3) A statement whether there is support for forked networks of each
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digital asset;
(4) A statement that investment in digital assets is volatile and subject
to market loss;
(5) A statement that investment in digital assets may result in total loss
of value;
(6) A statement that legal, legislative, and regulatory changes may impair
the value of digital assets;
(7) A statement that customers should perform research before investing in
digital assets;
(8) A statement that transfers of digital assets are irrevocable, if
applicable;
(9) A statement how liability for an unauthorized, mistaken, or accidental
transfer shall be apportioned;
(10) A statement that digital assets are not legal tender in any
jurisdiction;
(11) A statement that digital assets may be subject to cyber theft or
theft and become unrecoverable;
(12) A statement about who maintains control, ownership, and access to any
private key related to a digital assets customer's digital asset account; and
(13) A statement that losing private key information may result in
permanent total loss of access to digital assets.
Sec. 9. (1) At all times, a digital asset depository shall maintain
unencumbered liquid assets denominated in United States dollars valued at not
less than one hundred percent of the digital assets in custody.
(2) For purposes of this section, liquid assets means:
(a) United States currency held on the premises of the digital asset
depository that is not a digital asset depository institution;
(b) United States currency held for the digital asset depository by a
federal reserve bank or a Federal Deposit Insurance Corporation-insured
financial institution which has a main-chartered office in this state, any
branch thereof in this state, or any branch of the financial institution which
maintained a main-chartered office in this state prior to becoming a branch of
such financial institution; or
(c) Investments which are highly liquid and obligations of the United
States treasury or other federal agency obligations, consistent with rules and
regulations or order adopted by the director.
Sec. 10. A digital asset depository shall comply with all state and
federal laws, including, but not limited to, those relating to anti-money
laundering, customer identification, and beneficial ownership.
Sec. 11. (1) With respect to all digital asset business activities, a
digital asset depository shall display and include in all advertising, in all
marketing materials, on any Internet web site it maintains, and at each window
or place where it accepts digital asset deposits, (a) a notice conspicuously
stating that digital asset deposits and digital asset accounts are not insured
by the Federal Deposit Insurance Corporation, if applicable, and (b) the
following conspicuous statement: Holdings of digital assets are speculative and
involve a substantial degree of risk, including the risk of complete loss.
There is no assurance that any digital asset will be viable, liquid, or
solvent. Nothing in this communication is intended to imply that any digital
asset held in custody by a digital asset depository is low-risk or risk-free.
Digital assets held in custody are not guaranteed by a digital asset depository
and are not FDIC insured.
(2) Upon opening a digital asset depository account, and if applicable, a
digital asset depository shall require each customer to execute a statement
acknowledging that all digital asset deposits at the digital asset depository
are not insured by the Federal Deposit Insurance Corporation. The digital asset
depository shall permanently retain this acknowledgment, whether in electronic
form or as a signature card.
Sec. 12. (1) Except as otherwise provided by subsection (5) of this
section, five or more adult persons, including at least one Nebraska resident,
may form a digital asset depository institution. The incorporators shall
subscribe the articles of incorporation and transmit them to the director as
part of an application for a charter under section 15 of this act.
(2) The articles of incorporation shall include the following information:
(a) The corporate name;
(b) The object for which the corporation is organized;
(c) The term of its existence, which may be perpetual;
(d) The place in Nebraska where its main office shall be physically
located and its operations conducted;
(e) The amount of capital stock and the number of shares;
(f) The name and residence of each shareholder subscribing to more than
ten percent of the stock and the number of shares owned by that shareholder;
(g) The number of directors and the names of those who shall manage the
affairs of the corporation for the first year; and
(h) A statement that the articles of incorporation are made to enable the
incorporators to avail themselves of the advantages of the laws of the state.
(3) Copies of all amended articles of incorporation shall be filed in the
same manner as the original articles of incorporation.
(4) The incorporators shall solicit capital prior to filing an application
for a charter with the director, consistent with section 13 of this act. In the
event an application for a charter is not filed or is denied by the director,
all capital shall be promptly returned without loss.
(5) Subject to federal and state law, a bank holding company may apply to
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hold a digital asset depository.
Sec. 13. (1) The capital stock of each digital asset depository
institution chartered under the Nebraska Financial Innovation Act shall be
subscribed for as paid-up stock. No digital asset depository institution shall
be chartered with capital stock of less than ten million dollars.
(2) No digital asset depository institution shall commence business until
the full amount of its authorized capital is subscribed and all capital stock
is fully paid in. No digital asset depository institution may be chartered
without a paid-up surplus fund of at least three years of estimated operating
expenses in the amount disclosed pursuant to subsection (2) of section 15 of
this act or in another amount required by the director.
(3) A digital asset depository institution may acquire additional capital
prior to the granting of a charter and shall report this capital in its charter
application.
Sec. 14. (1) Any financial institution, having adopted or amended its
articles of incorporation to authorize the conduct of a digital asset
depository business may be further chartered by the director to transact a
digital asset depository business in a digital asset depository department in
connection with such financial institution.
(2) The director has the authority to issue to financial institutions
amendments to their charters of authority to transact digital asset depository
business and has general supervision and control over such digital asset
depository departments of financial institutions.
(3) The director, before granting to any financial institution the right
to operate a digital asset depository department, shall require such financial
institution to make an application for amendment of its charter, setting forth
such information as the director may require.
(4) A digital asset depository department of a financial institution when
chartered under subsection (1) of this section shall be separate and apart from
every other department of the financial institution and shall have all of the
powers, duties, and obligations of a digital asset depository institution as
set forth in the Nebraska Financial Innovation Act.
(5) Any financial institution authorized to transact a digital asset
depository business in a digital asset depository department pursuant to
subsection (1) of this section may conduct such digital asset depository
business at the office of any financial institution which is a subsidiary of
the same bank holding company as the authorized financial institution.
(6) A financial institution may deposit or have on deposit funds of an
account controlled by the financial institution's digital asset depository
department unless prohibited by applicable law.
Sec. 15. (1) No corporation shall act as a digital asset depository
without first obtaining authority or a charter to operate from the director
under the Nebraska Financial Innovation Act.
(2) The incorporators under section 12 of this act shall apply to the
director for a charter. The application shall contain the digital asset
depository institution's articles of incorporation, a detailed business plan, a
comprehensive estimate of operating expenses for the first three years of
operation, a complete proposal for compliance with the provisions of the
Nebraska Financial Innovation Act, evidence of the capital required under
section 13 of this act, and any investors or owners holding ten percent or more
equity in the digital asset depository institution. The director may prescribe
the form of application.
(3) A financial institution may apply to the director for authority to
operate a digital asset depository business as a department. The application
shall contain a detailed business plan, a comprehensive estimate of operating
expenses for the first three years of operation, and a complete proposal for
compliance with the provisions of the Nebraska Financial Innovation Act. The
director may prescribe the form of application.
(4) Each application for a charter or authority shall be accompanied by an
application fee of fifty thousand dollars.
Sec. 16. (1) After a substantially complete application for digital asset
depository authority or a digital asset depository institution charter has been
submitted, the director shall notify the applicants in writing within thirty
calendar days of any deficiency in the required information or that the
application has been accepted for filing. When the director is satisfied that
all required information has been furnished, the director shall establish a
time and place for a public hearing which shall be conducted not less than
sixty days, nor more than one hundred twenty days, after notice from the
director to the applicants that the application is in order.
(2) Within thirty days after receipt of notice of the time and place of
the public hearing, the department shall cause notice of filing of the
application and the hearing to be published at the applicants' expense in a
newspaper of general circulation within the county where the proposed digital
asset depository is to be located. Publication shall be made at least once a
week for three consecutive weeks before the hearing, stating the proposed
location of the digital asset depository, the names of the applicants for a
charter, the nature of the activities to be conducted by the proposed digital
asset depository, and other information required by rule and regulation. The
director shall electronically send notice of the hearing to state and national
banks, federal savings and loan associations, state and federal credit unions,
and other financial institutions in the state, federal agencies, and financial
industry trade groups.
Sec. 17. The hearing for a charter application or for authority to
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operate a digital asset depository shall be conducted under the Administrative
Procedure Act and shall comply with the requirements of the act.
Sec. 18. Upon receiving the application for a charter to become a digital
asset depository institution, or for authority to operate a digital asset
depository department, the applicable fee, and other information required by
the director, the director shall make a careful investigation and examination
of the following:
(1) The character, reputation, criminal record, financial standing, and
ability of the shareholders owning ten percent or more equity in the applicant;
(2) The character, financial responsibility, criminal background, banking
or other financial experience, and business qualifications of those proposed as
officers and directors;
(3) Whether the applicant or any of its officers, directors, or
shareholders owning ten percent or more equity in the applicant have ever been
convicted of any (i) misdemeanor involving any aspect of a digital asset
depository business or any business of a similar nature or (ii) felony;
(4) Whether the applicant or any of its officers, directors, or
shareholders owning ten percent or more equity in the applicant have ever been
permanently or temporarily enjoined by a court of competent jurisdiction from
engaging in or continuing any conduct or practice involving any aspect of a
digital asset depository business or any business of a similar nature;
(5) A criminal history record information check of the applicant, its
officers, directors, and shareholders owning ten percent or more equity in the
applicant. The direct cost of the criminal history record information check
shall be paid by the applicant; and
(6) The application for a charter, or for authority to operate a digital
asset depository, including the adequacy and plausibility of the business plan
of the digital asset depository, the benefits to the customers, and whether the
applicant has offered a complete proposal for compliance with the Nebraska
Financial Innovation Act.
Sec. 19. (1) Within ninety days after receipt of the transcript of the
public hearing, the director shall render a decision on the application based
on the following criteria and requirements:
(a) Whether the character, reputation, criminal record, financial
standing, and ability of the shareholders owning ten percent or more equity in
the applicant are sufficient to afford reasonable promise of a successful
operation;
(b) That the digital asset depository will be operated by officers of
integrity and responsibility;
(c) Whether the character, financial responsibility, criminal background,
and banking or other financial experience and business qualifications of those
proposed as officers and directors are sufficient to afford reasonable promise
of a successful operation;
(d) The adequacy and plausibility of the business plan of the digital
asset depository institution, including the ongoing customer expectations of
the digital asset depository institution as determined by the director;
(e) Compliance by the digital asset depository institution with the
capital and surplus requirements of section 13 of this act;
(f) Whether the digital asset depository institution is being formed for
no other purpose than legitimate objectives authorized by law;
(g) That the name of the proposed digital asset depository institution
includes the words "digital asset bank" so that it does not resemble the name
of any other financial institution transacting business in the state so as to
cause confusion;
(h) That the digital asset depository will be operated in a safe and sound
manner to benefit its customers;
(i) That the digital asset depository shall help meet the digital
financial needs of the communities in which it operates, consistent with safe
and sound operations, and shall maintain and update a public file and on any
Internet web site it maintains containing specific information about its
efforts to meet community needs, including:
(i) The collection and reporting of data;
(ii) Its policies and procedures for accepting and responding to consumer
complaints; and
(iii) Its efforts to assist with financial literacy or personal finance
programs to increase knowledge and skills of Nebraska students in areas such as
budgeting, credit, checking and savings accounts, loans, stocks, and insurance;
(j) Whether the applicants have complied with all provisions of state law
and are eligible to apply for membership in the federal reserve system; and
(k) Any other considerations in addition to statutory requirements
submitted by the applicant pursuant to operational order, rules and
regulations, or request of the department.
(2) The director shall approve an application upon making favorable
findings on the criteria set forth in subsection (1) of this section. If
necessary, the director may either conditionally approve an application by
specifying conditions relating to the criteria or may disapprove the
application. The director shall state findings of fact and conclusions of law
as part of such decision.
(3) If the director approves the application, the director shall issue an
order.
Sec. 20. (1) If an application is approved and a charter or authority is
granted by the director under section 19 of this act, the digital asset
depository shall not commence business before satisfaction of all conditions
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precedent contained in the director's order or conditional order.
(2) If an approved digital asset depository fails to commence business in
good faith within twelve months after the issuance of a charter or an order of
authority to operate by the director, the charter or authority shall expire.
The director, for good cause and upon an application filed prior to the
expiration of the six-month period, may extend the time within which the
digital asset depository may open for business.
Sec. 21. Any decision of the department or director in approving,
conditionally approving, or disapproving a charter or authority for a digital
asset depository is appealable in accordance with the Administrative Procedure
Act.
Sec. 22. (1) Except as otherwise provided by subsection (2) of this
section, a digital asset depository shall, before transacting any business,
pledge or furnish a surety bond to the director to cover costs likely to be
incurred by the director in a liquidation or conservatorship of the digital
asset depository. The amount of the surety bond or pledge of assets under
subsection (2) of this section shall be determined by the director in an amount
sufficient to defray the costs of a liquidation or conservatorship.
(2) In lieu of a bond, a digital asset depository may irrevocably pledge
specified assets equivalent to a bond under subsection (1) of this section. Any
assets pledged to the director under this subsection shall be held in a state
or nationally chartered bank, trust company, federal reserve bank, or savings
and loan association having a principal or branch office in this state,
excluding affiliated institutions. All costs associated with pledging and
holding such assets are the responsibility of the digital asset depository.
(3) Assets pledged to the director shall not include money and shall be of
the same nature and quality as those required under section 8-210.
(4) Surety bonds shall run to the State of Nebraska, and shall be approved
under the terms and conditions required under section 8-110.
(5) The director may by order or rules and regulations establish
additional investment guidelines or investment options for purposes of the
pledge or surety bond required by this section.
(6) In the event of a liquidation or conservatorship of a digital asset
depository pursuant to section 27 of this act, the director may, without regard
to priorities, preferences, or adverse claims, reduce the surety bond or assets
pledged under this section to cash as soon as practicable and utilize the cash
to defray the costs associated with the liquidation or conservatorship.
(7) Income from assets pledged under subsection (2) of this section shall
be paid to the digital asset depository no less than annually, unless a
liquidation or conservatorship takes place.
(8) Upon evidence that the current surety bond is or pledged assets are
insufficient, the director may require a digital asset depository to increase
its surety bond or pledged assets by providing not less than thirty days'
written notice to the digital asset depository.
Sec. 23. (1) The director may call for reports verified under oath from a
digital asset depository at any time as necessary to inform the director of the
condition of the digital asset depository. Such reports shall be available to
the public.
(2) All reports required of a digital asset depository by the director and
all materials relating to examinations of a digital asset depository shall be
subject to the provisions of sections 8-103 and 8-108.
(3) Every digital asset depository is subject to examination by the
department to determine the condition and resources of a digital asset
depository, the mode of managing digital asset depository affairs and
conducting business, the actions of officers and directors in the investment
and disposition of funds, the safety and prudence of digital asset depository
management, compliance with the requirements of the Nebraska Financial
Innovation Act, and such other matters as the director may require.
(4) A digital asset depository shall pay an assessment in a sum to be
determined by the director in accordance with section 8-601 and approved by the
Governor and the costs of any examination or investigation as provided in
sections 8-108 and 8-606.
(5) A digital asset depository shall maintain appropriate insurance or a
bond covering the operational risks of the digital asset depository, which
shall include coverage for directors' and officers' liability, errors and
omissions liability, and information technology infrastructure and activities
liability as determined by the director.
Sec. 24. A digital asset depository is authorized to carry on one or more
of the following digital asset business activities:
(1) Provide digital asset and cryptocurrency custody services;
(2) Issue stablecoins and hold deposits at a Federal Deposit Insurance
Corporation-insured financial institution which has a main-chartered office in
this state, any branch thereof in this state, or any branch of the financial
institution which maintained a main-chartered office in this state prior to
becoming a branch of such financial institution that serves as reserves for
stablecoins; and
(3) Use independent node verification networks and stablecoins for payment
activities.
Sec. 25. The director may suspend or revoke the charter or authority of a
digital asset depository if, after notice and opportunity for a hearing, the
director determines that:
(1) The digital asset depository has failed or refused to comply with an
order issued under section 8-1,136, 8-2504, or 8-2743;
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(2) The application for a charter or authority contained a materially
false statement, misrepresentation, or omission; or
(3) An officer, a director, or an agent of the digital asset depository,
in connection with an application for a charter or authority, an examination, a
report, or other document filed with the director, knowingly made a materially
false statement, misrepresentation, or omission to the department, the
director, or the duly authorized agent of the department or director.
Sec. 26. If the charter or authority of a digital asset depository is
surrendered, suspended, or revoked, the digital asset depository shall continue
to be subject to the provisions of the Nebraska Financial Innovation Act during
any liquidation or conservatorship.
Sec. 27. (1) If the director finds that a digital asset depository has
failed, is operating in an unsafe or unsound condition, or is endangering the
interests of customers, and the failure, unsafe or unsound condition, or
endangerment has not been remedied within the time prescribed under section
8-1,117 or as directed by order of the director issued pursuant to section
8-1,136, 8-2504, or 8-2743, the director shall conduct a liquidation or appoint
a receiver as provided by sections 8-198, 8-1,100, and 8-1,102.
(2) For purposes of this section:
(a) Failed or failure means, consistent with an order or rules and
regulations of the director, a circumstance when a digital asset depository has
not:
(i) Complied with the requirements of section 9 of this act;
(ii) Maintained capital and surplus as required by section 13 of this act;
or
(iii) Paid, in the manner commonly accepted by business practices, its
legal obligations to customers on demand or to discharge any promissory notes,
or other indebtedness when due; and
(b) Unsafe or unsound condition means, consistent with an order or rules
and regulations of the director, a circumstance relating to a digital asset
depository which is likely to:
(i) Cause the failure of the digital asset depository;
(ii) Cause a substantial dissipation of assets or earnings;
(iii) Substantially disrupt the services provided by the digital asset
depository to customers; or
(iv) Otherwise substantially prejudice the interests of customers of the
digital asset depository.
Sec. 28. (1) A digital asset depository may voluntarily dissolve in
accordance with this section. Voluntary dissolution shall be accomplished by
either liquidating the digital asset depository or reorganizing the digital
asset depository into an appropriate business entity that does not engage in
any activity authorized only for a digital asset depository. Upon complete
liquidation or completion of the reorganization, the director shall revoke the
charter or authority of the digital asset depository. Thereafter, the
corporation or business entity shall not use the words digital asset depository
or digital asset bank in its business name or in connection with its ongoing
business.
(2) A digital asset depository institution may dissolve its charter either
by liquidation or reorganization. The board of directors shall file an
application for dissolution with the director, accompanied by a filing fee
established by an order or the rules and regulations of the director. The
application shall include a comprehensive plan for dissolution setting forth
the proposed disposition of all assets and liabilities in reasonable detail to
effect a liquidation or reorganization, and any other plans required by the
director. The plan of dissolution shall provide for the discharge or assumption
of all of the known and unknown claims and liabilities of the digital asset
depository institution. Additionally, the application for dissolution shall
include other evidence, certifications, affidavits, documents, or information
as the director may require, including demonstration of how assets and
liabilities will be disposed, the timetable for effecting disposition of the
assets and liabilities, and a proposal of the digital asset depository
institution for addressing any claims that are asserted after dissolution has
been completed. The director shall examine the application for compliance with
this section, the business entity laws applicable to the required type of
dissolution, and applicable orders and rules and regulations. The director may
conduct a special examination of the digital asset depository institution,
consistent with subsection (3) of section 23 of this act, for purposes of
evaluating the application.
(3) If the director finds that the application is incomplete, the director
shall return it for completion not later than sixty days after it is filed. If
the application is found to be complete by the director, the director shall
approve or disapprove the application not later than thirty days after it is
filed. If the director approves the application, the digital asset depository
institution may proceed with the dissolution pursuant to the plan outlined in
the application, subject to any further conditions the director may prescribe.
If the digital asset depository institution subsequently determines that the
plan of dissolution needs to be amended to complete the dissolution, it shall
file an amended plan with the director and obtain approval to proceed under the
amended plan. If the director does not approve the application or amended plan,
the digital asset depository institution may appeal the decision to the
director pursuant to the Administrative Procedure Act.
(4) Upon completion of all actions required under the plan of dissolution
and satisfaction of all conditions prescribed by the director, the digital
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asset depository institution shall submit a written report of its actions to
the director. The report shall contain a certification made under oath that the
report is true and correct. Following receipt of the report, the director, no
later than sixty days after the filing of the report, shall examine the digital
asset depository institution to determine whether the director is satisfied
that all required actions have been taken in accordance with the plan of
dissolution and any conditions prescribed by the director. If all requirements
and conditions have been met, the director shall, within thirty days of the
examination, notify the digital asset depository institution in writing that
the dissolution has been completed and issue an order of dissolution.
(5) Upon receiving an order of dissolution, the digital asset depository
institution shall surrender its charter to the director. The digital asset
depository institution shall then file articles of dissolution and other
documents required by sections 21-2,184 to 21-2,201 for a corporation with the
Secretary of State. In the case of reorganization, the digital asset depository
institution shall file the documents required by the Secretary of State to
finalize the reorganization.
(6) If the director determines that all required actions under the plan
for dissolution, or as otherwise required by the director, have not been
completed, the director shall notify the digital asset depository institution,
not later than thirty days after this determination, in writing, of what
additional actions shall be taken in order for the institution to be eligible
for a certificate of dissolution. The director shall establish a reasonable
deadline of up to thirty days for the submission of evidence that additional
actions have been taken and the director may extend any deadline upon good
cause. If the digital asset depository institution fails to file a supplemental
report showing that the additional actions have been taken before the deadline,
or submits a report that is found not to be satisfactory by the director, the
director shall notify the digital asset depository institution in writing that
its voluntary dissolution is not approved, and the institution may appeal the
decision to the director pursuant to the Administrative Procedure Act.
Sec. 29. If a digital asset depository fails to submit any report
required by the Nebraska Financial Innovation Act or by order or rules and
regulations of the director within the prescribed period, the director may
impose and collect a fee of five thousand dollars for each day the report is
overdue, as established by order of the director. The fee shall be remitted to
the State Treasurer for credit to the Department of Banking and Finance
Settlement Cash Fund.
Sec. 30. Each officer, director, employee, or agent of a digital asset
depository, following written notice from the director, is subject to removal
upon order of the director if such officer, director, employee, or agent
knowingly, willfully, or negligently:
(1) Fails to perform any duty required by the Nebraska Financial
Innovation Act or other applicable law;
(2) Fails to conform to any order or rules and regulations of the
director; or
(3) Endangers the interest of a customer.
Sec. 31. The director may issue any order and adopt and promulgate any
rules and regulations necessary to implement the Nebraska Financial Innovation
Act.
Sec. 32. Section 8-101.02, Revised Statutes Cumulative Supplement, 2020,
is amended to read:
8-101.02 Sections 8-101.02 to 8-1,140 and sections 39, 40, 41, and 42 of
this act shall be known and may be cited as the Nebraska Banking Act.
Sec. 33. Section 8-101.03, Revised Statutes Cumulative Supplement, 2020,
is amended to read:
8-101.03 For purposes of the Nebraska Banking Act, unless the context
otherwise requires:
(1) Access device means a code, a transaction card, or any other means of
access to a customer's account, or any combination thereof, that may be used by
a customer for the purpose of initiating an electronic funds transfer at an
automatic teller machine or a point-of-sale terminal;
(2) Acquiring financial institution means any financial institution
establishing a point-of-sale terminal;
(3) Automatic teller machine means a machine established and located in
the State of Nebraska, whether attended or unattended, which utilizes
electronic, sound, or mechanical signals or impulses, or any combination
thereof, and from which electronic funds transfers may be initiated and at
which banking transactions as defined in section 8-157.01 may be conducted. An
unattended automatic teller machine shall not be deemed to be a branch operated
by a financial institution;
(4) Automatic teller machine surcharge means a fee that an operator of an
automatic teller machine imposes upon a consumer for an electronic funds
transfer, if such operator is not the financial institution that holds an
account of such consumer from which the electronic funds transfer is to be
made;
(5) Bank or banking corporation means any incorporated banking institution
which was incorporated under the laws of this state as they existed prior to
May 9, 1933, and any corporation duly organized under the laws of this state
for the purpose of conducting a bank within this state under the act. Bank
means any such banking institution which is, in addition to the exercise of
other powers, following the practice of repaying deposits upon check, draft, or
order and of making loans. Bank or banking corporation includes a digital asset
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depository institution as defined in section 3 of this act. Notwithstanding the
provisions of this subdivision, a digital asset depository institution is
subject to the provisions of subdivision (2)(b) of section 5 of this act;
(6) Bank subsidiary corporation means a corporation which has a bank as a
shareholder and which is organized for purposes of engaging in activities which
are part of the business of banking or incidental to such business except for
the receipt of deposits. A bank subsidiary corporation may include a
corporation organized under the Nebraska Financial Innovation Act. A bank
subsidiary is not to be considered a branch of its bank shareholder;
(7) Capital or capital stock means capital stock;
(8) Data processing center means a facility, wherever located, at which
electronic impulses or other indicia of a transaction originating at an
automatic teller machine are received and either authorized or routed to a
switch or other data processing center in order to enable the automatic teller
machine to perform any function for which it is designed;
(9) Department means the Department of Banking and Finance;
(10) Digital asset depository means a financial institution that securely
holds liquid assets when such assets are in the form of controllable electronic
records, either as a corporation organized, chartered, and operated pursuant to
the Nebraska Financial Innovation Act as a digital asset depository
institution, or a financial institution operating a digital asset depository
business as a digital asset depository department under a grant of authority by
the director;
(11) (10) Director means the Director of Banking and Finance;
(12) (11) Financial institution means a bank, savings bank, building and
loan association, savings and loan association, or credit union, whether
chartered by the United States, the department, or a foreign state agency; any
other similar organization which is covered by federal deposit insurance; or a
trust company; or a digital asset depository that is not a digital asset
depository institution;
(13) (12) Financial institution employees includes parent holding company
and affiliate employees;
(14) (13) Foreign state agency means any duly constituted regulatory or
supervisory agency which has authority over financial institutions and which is
created under the laws of any other state, any territory of the United States,
Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands,
or the Virgin Islands or which is operating under the code of law for the
District of Columbia;
(15) (14) Impulse means an electronic, sound, or mechanical impulse, or
any combination thereof;
(16) (15) Insolvent means a condition in which (a) the actual cash market
value of the assets of a bank is insufficient to pay its liabilities to its
depositors, (b) a bank is unable to meet the demands of its creditors in the
usual and customary manner, (c) a bank, after demand in writing by the
director, fails to make good any deficiency in its reserves as required by law,
or (d) the stockholders of a bank, after written demand by the director, fail
to make good an impairment of its capital or surplus;
(17) (16) Making loans includes advances or credits that are initiated by
means of credit card or other transaction card. Transaction card and other
transactions, including transactions made pursuant to prior agreements, may be
brought about and transmitted by means of an electronic impulse. Such loan
transactions including transactions made pursuant to prior agreements shall be
subject to sections 8-815 to 8-829 and shall be deemed loans made at the place
of business of the financial institution;
(18) (17) Order includes orders transmitted by electronic transmission;
(19) (18) Point-of-sale terminal means an information processing terminal
which utilizes electronic, sound, or mechanical signals or impulses, or any
combination thereof, which are transmitted to a financial institution or which
are recorded for later transmission to effectuate electronic funds transfer
transactions for the purchase or payment of goods and services and which are
initiated by an access device. A point-of-sale terminal is not a branch
operated by a financial institution. Any terminal owned or operated by a seller
of goods and services shall be connected directly or indirectly to an acquiring
financial institution; and
(20) (19) Switch means any facility where electronic impulses or other
indicia of a transaction originating at an automatic teller machine are
received and are routed and transmitted to a financial institution or data
processing center, wherever located. A switch may also be a data processing
center.
Sec. 34. Section 8-102, Revised Statutes Cumulative Supplement, 2020, is
amended to read:
8-102 The department shall, under the laws of this state specifically made
applicable to each, have general supervision and control over banks, trust
companies, credit unions, building and loan associations, and savings and loan
associations, and digital asset depositories, all of which are hereby declared
to be quasi-public in nature and subject to regulation and control by the
state.
Sec. 35. Section 8-113, Revised Statutes Cumulative Supplement, 2020, is
amended to read:
8-113 (1) No individual, firm, company, corporation, or association doing
business in the State of Nebraska, unless organized as a bank under the
Nebraska Banking Act or the authority of the director or federal government, a
digital asset depository that is not a digital asset depository institution, or
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as a building and loan association, savings and loan association, or savings
bank under Chapter 8, article 3, or the authority of the federal government,
shall use the word bank or any derivative thereof as any part of a title or
description of any business activity.
(2) This section does not apply to:
(a) Banks, building and loan associations, savings and loan associations,
or savings banks chartered and supervised by a foreign state agency;
(b) Bank holding companies registered pursuant to section 8-913 if the
term holding company is also used as any part of the title or description of
any business activity or if the derivative banc is used;
(c) Affiliates or subsidiaries of (i) a bank organized under the Nebraska
Banking Act or the authority of the federal government or chartered and
supervised by a foreign state agency, (ii) a building and loan association,
savings and loan association, or savings bank organized under Chapter 8,
article 3, or the authority of the federal government or chartered and
supervised by a foreign state agency, or (iii) a bank holding company
registered pursuant to section 8-913 if the term holding company is also used
as any part of the title or description of any business activity or if the
derivative banc is used;
(d) Organizations substantially owned by (i) a bank organized under the
Nebraska Banking Act or the authority of the federal government or chartered
and supervised by a foreign state agency, (ii) a building and loan association,
savings and loan association, or savings bank organized under Chapter 8,
article 3, or the authority of the federal government or chartered and
supervised by a foreign state agency, (iii) a bank holding company registered
pursuant to section 8-913 if the term holding company is also used as any part
of the title or description of any business activity or if the derivative banc
is used, or (iv) any combination of entities listed in subdivisions (i) through
(iii) of this subdivision;
(e) Mortgage bankers licensed or registered under the Residential Mortgage
Licensing Act, if the word mortgage immediately precedes the word bank or its
derivative;
(f) Digital asset depository institutions chartered under the Nebraska
Financial Innovation Act, if the term digital asset is also used as any part of
the title or description of any business activity or if any derivative of the
word bank is used in such title or description of any such business activity;
(g) (f) Organizations which are described in section 501(c)(3) of the
Internal Revenue Code as defined in section 49-801.01, which are exempt from
taxation under section 501(a) of the code, and which are not providing or
arranging for financial services subject to the authority of the department, a
foreign state agency, or the federal government;
(h) (g) Trade associations which are exempt from taxation under section
501(c)(6) of the code and which represent a segment of the banking or savings
and loan industries, and any affiliate or subsidiary thereof;
(i) (h) Firms, companies, corporations, or associations which sponsor
incentive-based solid waste recycling programs that issue reward points or
credits to persons for their participation therein; and
(j) (i) Such other firms, companies, corporations, or associations as have
been in existence and doing business prior to December 1, 1975, under a name
composed in part of the word bank or some derivative thereof.
(3) This section does not apply to an individual, firm, company,
corporation, or association doing business in Nebraska which uses the word bank
or any derivative thereof as any part of a title or description of any business
activity if such use is unlikely to mislead or confuse the public or give the
impression that such individual, firm, company, corporation, or association is
lawfully organized and operating as a bank under the Nebraska Banking Act or
the authority of the federal government, or as a building and loan association,
savings and loan association, or savings bank under Chapter 8, article 3, or
the authority of the federal government.
(4) Any violation of this section is a Class V misdemeanor.
Sec. 36. Section 8-115, Reissue Revised Statutes of Nebraska, is amended
to read:
8-115 No corporation shall conduct a bank or digital asset depository in
this state without having first obtained a charter or under a grant of
authority in the case of a digital asset depository in the manner provided in
the Nebraska Banking Act or the Nebraska Financial Innovation Act,
respectively.
Sec. 37. Section 8-148.09, Revised Statutes Cumulative Supplement, 2020,
is amended to read:
8-148.09 (1) Any bank may subscribe to, invest, buy, and own stock of
another financial institution if the transaction is part of the merger or
consolidation of the other financial institution with the acquiring bank, or
the acquisition of substantially all of the assets of the other financial
institution by the acquiring bank, and if:
(a) The merger, consolidation, or asset acquisition occurs on the same day
as the acquisition of the shares of the other financial institution and the
other financial institution will not be operated by the acquiring bank as a
separate entity; and
(b) The transaction receives the prior approval of the director.
(2) Any bank may subscribe to, invest, buy, and own stock of a company
controlling another financial institution if the transaction is part of (a) the
merger or consolidation of the company controlling the other financial
institution with the company controlling the acquiring bank, or the acquisition
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of substantially all of the assets of the company controlling the other
financial institution by the company controlling the acquiring bank, and (b)
the merger or consolidation of the other financial institution with the
acquiring bank, or the acquisition of substantially all of the assets of the
other financial institution by the acquiring bank, and if:
(i) The merger, consolidation, or asset acquisition occurs on the same day
as the acquisition of the shares of the company controlling the other financial
institution, and neither the company controlling the other financial
institution nor the other financial institution will be operated by the
acquiring bank as a separate entity; and
(ii) The transaction receives the prior approval of the director.
(3) Any bank that acquires stock of another financial institution or
company controlling another financial institution pursuant to this section
shall not be deemed to be a bank holding company for purposes of the Nebraska
Bank Holding Company Act of 1995, so long as the conditions of subdivision (1)
(a) or (2)(b)(i) of this section, as applicable, are satisfied.
(4) For purposes of this section, financial institution means a bank,
savings bank, credit card bank, savings and loan association, digital asset
depository institution, building and loan association, trust company, or credit
union organized under the laws of any state or organized under the laws of the
United States.
Sec. 38. Section 8-1,140, Revised Statutes Cumulative Supplement, 2020, is
amended to read:
8-1,140 Notwithstanding any of the other provisions of the Nebraska
Banking Act or any other Nebraska statute, any bank incorporated under the laws
of this state and organized under the provisions of the act, or under the laws
of this state as they existed prior to May 9, 1933, shall directly, or
indirectly through a department, a subsidiary, or subsidiaries, have all the
rights, powers, privileges, benefits, and immunities which may be exercised as
of January 1, 2021 2020, by a federally chartered bank doing business in
Nebraska, including the exercise of all powers and activities that are
permitted for a financial subsidiary of a federally chartered bank. Such
rights, powers, privileges, benefits, and immunities shall not relieve such
bank from payment of state taxes assessed under any applicable laws of this
state.
Sec. 39. Any financial institution as defined in section 3 of this act
other than a digital asset depository institution as defined in section 3 of
this act may invest not more than ten percent of its capital and surplus either
in stock of a corporation operating a digital asset depository institution or
directly, alone, or with others, in a digital asset depository institution.
With written approval of the director, such additional percentage of its
capital and surplus may be so invested as the director shall approve. Such
investment is not subject to sections 8-148, 8-149, and 8-150.
Sec. 40. (1) The provisions of this section are cumulative and not
exclusive as an optional framework for enhanced supervision of controllable
electronic record custody.
(2) If a financial institution is authorized to provide digital asset
services under this section, it shall comply with all provisions of this
section.
(3) A financial institution may serve as a qualified custodian, as
specified by the United States Securities and Exchange Commission in 17 C.F.R.
275.206(4)-2 or any other federal rule or regulation. In performing custodial
services under this section, a financial institution shall:
(a) Implement all accounting, account statement, internal control, notice,
and other standards specified by applicable state or federal law and rules for
custodial services;
(b) Maintain information technology best practices relating to
controllable electronic records held in custody. The director may specify
required best practices by rule and regulation;
(c) Fully comply with applicable federal anti-money laundering, customer
identification, and beneficial ownership requirements; and
(d) Take other actions necessary to carry out this section, which may
include exercising fiduciary powers similar to those permitted to national
banks and ensuring compliance with federal law governing controllable
electronic records classified as commodities.
(4) A financial institution providing custodial services shall enter into
an agreement with an independent public accountant to conduct an examination
conforming to the requirements of 17 C.F.R. 275.206(4)-2(a)(4) and (6), at the
cost of the financial institution. The accountant shall transmit the results of
the examination to the director within ninety days of the examination and may
file the results with the United States Securities and Exchange Commission as
its rules may provide. Material discrepancies in an examination shall be
reported to the director within one day. The director shall review examination
results upon receipt within a reasonable time and during any regular
examination conducted under section 8-108.
(5) Controllable electronic records held in custody under this section are
not depository liabilities or assets of the financial institution. A financial
institution or a subsidiary may register as an investment adviser, investment
company, or broker dealer as necessary. A financial institution shall maintain
control over a controllable electronic record while in custody. A customer
shall elect, pursuant to a written agreement with the financial institution,
one of the following relationships for each controllable electronic record held
in custody:
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(a) Custody under a bailment as a nonfungible or fungible asset. Assets
held under this subdivision shall be strictly segregated from other assets; or
(b) Custody under a bailment pursuant to subsection (6) of this section.
(6) If a customer makes an election under subdivision (5)(b) of this
section, the financial institution may, based only on customer instructions,
undertake transactions with the controllable electronic record. A financial
institution maintains control pursuant to subsection (5) of this section by
entering into an agreement with the counterparty to a transaction which
contains a time for return of the asset. The financial institution shall not be
liable for any loss suffered with respect to a transaction under this
subsection, except for liability consistent with fiduciary and trust powers as
a custodian under this section.
(7) A financial institution and a customer shall agree in writing
regarding the source code version the financial institution will use for each
controllable electronic record and the treatment of each record under the
Uniform Commercial Code, if necessary. Any ambiguity under this subsection
shall be resolved in favor of the customer.
(8) A financial institution shall provide clear, written notice to each
customer and require written acknowledgement of the following:
(a) Prior to the implementation of any updates, material source code
updates relating to controllable electronic records held in custody, except in
emergencies which may include security vulnerabilities;
(b) The heightened risk of loss from transactions under subsection (6) of
this section;
(c) That some risk of loss as a pro rata creditor exists as the result of
custody as a fungible asset or custody under subdivision (5)(b) of this
section;
(d) That custody under subdivision (5)(b) of this section may not result
in the controllable electronic records of the customer being strictly
segregated from other customer assets; and
(e) That the financial institution is not liable for losses suffered under
subsection (6) of this section, except for liability consistent with fiduciary
and trust powers as a custodian under this section.
(9) A financial institution and a customer shall agree in writing to a
time period within which the financial institution must return a controllable
electronic record held in custody under this section. If a customer makes an
election under subdivision (5)(b) of this section, the financial institution
and the customer may also agree in writing to the form in which the
controllable electronic record shall be returned.
(10) All ancillary or subsidiary proceeds relating to controllable
electronic records held in custody under this section shall accrue to the
benefit of the customer, except as specified by a written agreement with the
customer. The financial institution may elect not to collect certain ancillary
or subsidiary proceeds, as long as the election is disclosed in writing. A
customer who makes an election under subdivision (5)(a) of this section may
withdraw the controllable electronic record in a form that permits the
collection of the ancillary or subsidiary proceeds.
(11) A financial institution shall not authorize or permit rehypothecation
of controllable electronic records under this section and shall not engage in
any activity to use or exercise discretionary authority relating to a
controllable electronic record except based on customer instructions.
(12) A financial institution shall not take any action under this section
which would likely impair the solvency or the safety and soundness of the
financial institution, as determined by the director after considering the
nature of custodial services customary in the banking industry.
(13) To offset the costs of supervision and administration of this
section, a financial institution which provides custodial services under this
section shall pay the assessment as provided for in sections 8-601 and 8-605,
which assessment shall not be less than two thousand dollars, and the costs of
any examination or investigation as provided in sections 8-108 and 8-606.
(14) For purposes of this section, financial institution means a bank,
savings bank, building and loan association, savings and loan association,
whether chartered by the United States, the department, or a foreign state
agency; or a trust company.
Sec. 41. The director may adopt and promulgate rules and regulations to
implement sections 40 to 42 of this act.
Sec. 42. The courts of Nebraska shall have jurisdiction to hear claims in
both law and equity relating to controllable electronic records, including
those arising under sections 40 to 42 of this act and the Uniform Commercial
Code.
Sec. 43. Section 8-601, Revised Statutes Cumulative Supplement, 2020, is
amended to read:
8-601 The Director of Banking and Finance may employ deputies, examiners,
attorneys, and other assistants as may be necessary for the administration of
the provisions and purposes of the Credit Union Act, Delayed Deposit Services
Licensing Act, Interstate Branching and Merger Act, Interstate Trust Company
Office Act, Nebraska Bank Holding Company Act of 1995, Nebraska Banking Act,
Nebraska Financial Innovation Act, Nebraska Installment Loan Act, Nebraska
Installment Sales Act, Nebraska Money Transmitters Act, Nebraska Trust Company
Act, and Residential Mortgage Licensing Act; Chapter 8, articles 3, 5, 6, 7, 8,
13, 14, 15, 16, 19, 20, 24, and 25; and Chapter 45, articles 1 and 2. The
director may levy upon financial institutions, namely, the banks, trust
companies, building and loan associations, savings and loan associations,
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savings banks, digital asset depositories, and credit unions, organized under
the laws of this state, and holding companies, if any, of such financial
institutions, an assessment each year based upon the asset size of the
financial institution, except that in determining the asset size of a holding
company or digital asset depository, the assets of any financial institution or
holding company otherwise assessed pursuant to this section and the assets of
any nationally chartered financial institution shall be excluded. The
assessment for digital asset depositories under the Nebraska Financial
Innovation Act shall be in an amount to offset the costs of supervision and
administration of the Nebraska Financial Innovation Act. The assessment shall
be a sum determined by the director in accordance with section 8-606 and
approved by the Governor.
Sec. 44. Section 8-602, Revised Statutes Cumulative Supplement, 2020, is
amended to read:
8-602 The Director of Banking and Finance shall charge and collect fees
for certain services rendered by the Department of Banking and Finance
according to the following schedule:
(1) For filing and examining articles of incorporation, articles of
association, and bylaws, except credit unions, one hundred dollars, and for
credit unions, fifty dollars;
(2) For filing and examining an amendment to articles of incorporation,
articles of association, and bylaws, except credit unions, fifty dollars, and
for credit unions, fifteen dollars;
(3) For issuing to banks, credit card banks, trust companies, and building
and loan associations a charter, authority, or license to do business in this
state, a sum which shall be determined on the basis of one dollar and fifty
cents for each one thousand dollars of authorized capital, except that the
minimum fee in each case shall be two hundred twenty-five dollars;
(4) For issuing to digital asset depositories under the Nebraska Financial
Innovation Act a charter, an authority, or a license to do business in this
state, the sum of fifty thousand dollars;
(5) (4) For issuing an executive officer's or loan officer's license,
fifty dollars at the time of the initial license, except credit unions for
which the fee shall be twenty-five dollars at the time of the initial license;
(6) (5) For affixing certificate and seal, five dollars;
(7) (6) For making substitution of securities held by it and issuing a
receipt, fifteen dollars;
(8) (7) For issuing a certificate of approval to a credit union, ten
dollars;
(9) (8) For investigating the applications required by sections 8-117,
8-120, 8-331, and 8-2402 and the documents required by section 8-201, the cost
of such examination, investigation, and inspection, including all legal
expenses and the cost of any hearing transcript, with a minimum fee under (a)
sections 8-117, 8-120, and 8-2402 of two thousand five hundred dollars, (b)
section 8-331 of two thousand dollars, and (c) section 8-201 of one thousand
dollars. The department may require the applicant to procure and give a surety
bond in such principal amount as the department may determine and conditioned
for the payment of the fees provided in this subdivision;
(10) (9) For the handling of pledged securities as provided in sections
8-210 and 8-2727 at the time of the initial deposit of such securities, one
dollar and fifty cents for each thousand dollars of securities deposited and a
like amount on or before January 15 each year thereafter. The fees shall be
paid by the entity pledging the securities;
(11) (10) For investigating an application to move its location within the
city or village limits of its original license or charter for banks, trust
companies, and building and loan associations, two hundred fifty dollars;
(12) (11) For investigating an application under subdivision (6) of
section 8-115.01, five hundred dollars;
(13) (12) For investigating an application for approval to establish or
acquire a branch pursuant to section 8-157 or 8-2103 or to establish a mobile
branch pursuant to section 8-157, two hundred fifty dollars;
(14) (13) For investigating a notice of acquisition of control under
subsection (1) of section 8-1502, five hundred dollars;
(15) (14) For investigating an application for a cross-industry merger
under section 8-1510, five hundred dollars;
(16) (15) For investigating an application for a merger of two state
banks, a merger of a state bank and a national bank in which the state bank is
the surviving entity, or an interstate merger application in which the Nebraska
state chartered bank is the resulting bank, five hundred dollars;
(17) (16) For investigating an application or a notice to establish a
branch trust office, five hundred dollars;
(18) (17) For investigating an application or a notice to establish a
representative trust office, five hundred dollars;
(19) (18) For investigating an application to establish a credit union
branch under section 21-1725.01, two hundred fifty dollars;
(20) (19) For investigating an applicant under section 8-1513, five
thousand dollars; and
(21) (20) For investigating a request to extend a conditional bank charter
under section 8-117, one thousand dollars; and .
(22) For investigating an application to establish a branch office, for a
merger or an acquisition of control, or for a request to extend a conditional
charter for a digital asset depository, five hundred dollars.
Sec. 45. Section 8-701, Revised Statutes Cumulative Supplement, 2020, is
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amended to read:
8-701 For purposes of sections 8-701 to 8-709, banking institution means
any bank, stock savings bank, mutual savings bank, building and loan
association, digital asset depository institution under the Nebraska Financial
Innovation Act, or savings and loan association, which is now or may hereafter
be organized under the laws of this state.
Sec. 46. Section 8-702, Revised Statutes Cumulative Supplement, 2020, is
amended to read:
8-702 (1) Any banking institution, except a digital asset depository
institution organized, chartered, and operated pursuant to the Nebraska
Financial Innovation Act, organized under the laws of this state shall, before
a charter may be issued, enter into such contracts, incur such obligations, and
generally do and perform any and all such acts and things whatsoever as may be
necessary or appropriate in order to obtain membership in the Federal Deposit
Insurance Corporation and provide for insurance of deposits in the banking
institution. Any banking institution may take advantage of any and all
memberships, loans, subscriptions, contracts, grants, rights, or privileges
which may at any time be available or inure to banking institutions or to their
depositors, creditors, stockholders, conservators, receivers, or liquidators by
virtue of those provisions of section 8 of the Federal Banking Act of 1933
(section 12B of the Federal Reserve Act, as amended) which establish the
Federal Deposit Insurance Corporation and provide for the insurance of deposits
or of any other provisions of that or of any other act or resolution of
Congress to aid, regulate, or safeguard banking institutions and their
depositors, including any amendments of the same or any substitutions therefor.
Any banking institution may also subscribe for and acquire any stock,
debentures, bonds, or other types of securities of the Federal Deposit
Insurance Corporation and comply with the lawful regulations and requirements
from time to time issued or made by such corporation.
(2) The charter of any banking institution which fails to maintain
membership in the Federal Deposit Insurance Corporation shall be automatically
forfeited and such banking institution shall be liquidated and dissolved,
either voluntarily by its board of directors under the supervision of the
department or involuntarily by the department as in cases of insolvency. Any
banking institution whose charter is automatically forfeited under the
provisions of this subsection which continues to engage in the business for
which it had been chartered after such forfeiture, as well as the directors and
officers thereof, is guilty of a Class III felony.
(3) Nothing in this section shall be construed as prohibiting a digital
asset depository institution organized, chartered, and operated pursuant to the
Nebraska Financial Innovation Act from obtaining Federal Deposit Insurance
Corporation insurance.
Sec. 47. Section 8-1120, Revised Statutes Cumulative Supplement, 2020, is
amended to read:
8-1120 (1) Except as otherwise provided in this section, the Securities
Act of Nebraska shall be administered by the Director of Banking and Finance
who may employ such deputies, examiners, assistants, or counsel as may be
reasonably necessary for the purpose thereof. The employment of any person for
the administration of the act is subject to section 49-1499.07. The director
may delegate to a deputy director or counsel any powers, authority, and duties
imposed upon or granted to the director under the act, such as may be lawfully
delegated under the common law or the statutes of this state. The director may
also employ special counsel with respect to any investigation conducted by him
or her under the act or with respect to any litigation to which the director is
a party under the act.
(2) A security issued by and representing an interest in or a debt of, or
guaranteed by, any insurance company shall be registered, pursuant to the
provisions of sections 8-1104 to 8-1109, with the Director of Insurance who
shall as to such registrations administer and enforce the act, and as pertains
to the administration and enforcement of such registration of such securities
all references in the act to director shall mean the Director of Insurance.
(3)(a) It shall be unlawful for the director or any of his or her
employees to use for personal benefit any information which is filed with or
obtained by the director and which is not made public. Neither the director nor
any of his or her employees shall disclose any confidential information except
among themselves, when necessary or appropriate in a proceeding, examination,
or investigation under the act, or as authorized in subdivision (3)(b) of this
subsection. No provision of the act shall either create or derogate from any
privilege which exists at common law or otherwise when documentary or other
evidence is sought under a subpoena directed to the director or any of his or
her employees.
(b)(i) In administering the act, the director may also:
(A) Enter into agreements or relationships with other government
officials, including, but not limited to, the securities administrator of a
foreign state and the Securities and Exchange Commission, or self-regulatory
organizations, to share resources, standardized or uniform methods or
procedures, and documents, records, and information; or
(B) Accept and rely on examination or investigation reports made by other
government officials, including, but not limited to, the securities
administrator of a foreign state and the Securities and Exchange Commission, or
self-regulatory organizations.
(ii) For purposes of this subdivision, foreign state means any state of
the United States, other than the State of Nebraska, any territory of the
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United States, including Puerto Rico, Guam, American Samoa, the Trust Territory
of the Pacific Islands, or the Virgin Islands, and the District of Columbia.
(4) The director may adopt and promulgate rules and regulations and
prescribe forms to carry out the act. No rule and regulation may be adopted and
promulgated or form may be prescribed unless the director finds that the action
is necessary or appropriate in the public interest or for the protection of
investors and consistent with the purposes fairly intended by the policy and
provisions of the act. In adopting and promulgating rules and regulations and
prescribing forms the director may cooperate with the securities administrators
of the other states and the Securities and Exchange Commission with a view to
effectuating the policy of the Securities Act of Nebraska to achieve maximum
uniformity in the form and content of registration statements, applications,
and reports wherever practicable. All rules and regulations and forms of the
director shall be published and made available to any person upon request.
(5) No provision of the act imposing any liability shall apply to any act
done or omitted in good faith in conformity with any rule and regulation, form,
or order of the director, notwithstanding that the rule and regulation or form
may later be amended or rescinded or be determined by judicial or other
authority to be invalid for any reason.
(6) Every hearing in an administrative proceeding shall be public unless
the director in his or her discretion grants a request joined in by all the
respondents that the hearing be conducted privately.
(7)(a) (7) The Securities Act Cash Fund is created. All filing fees,
registration fees, and all other fees and all money collected by or paid to the
director under any of the provisions of the act shall be remitted to the State
Treasurer for credit to the fund, except that registration fees collected by or
paid to the Director of Insurance pursuant to the provisions of the act shall
be credited to the Department of Insurance Cash Fund. The Securities Act Cash
Fund shall be used for the purpose of administering and enforcing the
provisions of the act, except that transfers may be made to the General Fund at
the direction of the Legislature. Any money in the Securities Act Cash Fund
available for investment shall be invested by the state investment officer
pursuant to the Nebraska Capital Expansion Act and the Nebraska State Funds
Investment Act.
(b) The State Treasurer shall transfer seven hundred twelve thousand four
hundred eighty-nine dollars from the Securities Act Cash Fund to the Financial
Institution Assessment Cash Fund on or before October 30, 2021, on such date as
directed by the budget administrator of the budget division of the Department
of Administrative Services.
(c) The State Treasurer shall transfer three hundred ninety-seven thousand
eighty-nine dollars from the Securities Act Cash Fund to the Financial
Institution Assessment Cash Fund on or before October 30, 2022, on such date as
directed by the budget administrator of the budget division of the Department
of Administrative Services.
(8) A document is filed when it is received by the director. The director
shall keep a register of all applications for registration and registration
statements which are or have ever been effective under the Securities Act of
Nebraska and all denial, suspension, or revocation orders which have ever been
entered under the act. The register shall be open for public inspection. The
information contained in or filed with any registration statement, application,
or report may be made available to the public under such conditions as the
director may prescribe.
(9) The director may, by rule and regulation or order, authorize or
require the filing of any document required to be filed under the act by
electronic or other means, processes, or systems.
(10) Upon request and at such reasonable charges as he or she shall
prescribe, the director shall furnish to any person photostatic or other
copies, certified under his or her seal of office if requested, of any entry in
the register or any document which is a matter of public record. In any
proceeding or prosecution under the act, any copy so certified shall be prima
facie evidence of the contents of the entry or document certified.
(11) The director in his or her discretion may honor requests from
interested persons for interpretative opinions.
Sec. 48. Section 8-2724, Revised Statutes Cumulative Supplement, 2020, is
amended to read:
8-2724 (1) The requirement for a license under the Nebraska Money
Transmitters Act does not apply to:
(a) The United States or any department, agency, or instrumentality
thereof;
(b) Any post office of the United States Postal Service;
(c) A state or any political subdivision thereof;
(d)(i) Banks, credit unions, digital asset depository institutions as
defined in section 3 of this act, building and loan associations, savings and
loan associations, savings banks, or mutual banks organized under the laws of
any state or the United States;
(ii) Subsidiaries of the institutions listed in subdivision (d)(i) of this
subsection;
(iii) Bank holding companies which have a banking subsidiary located in
Nebraska and whose debt securities have an investment grade rating by a
national rating agency; or
(iv) Authorized delegates of the institutions and entities listed in
subdivision (d)(i), (ii), or (iii) of this subsection, except that authorized
delegates that are not banks, credit unions, building and loan associations,
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savings and loan associations, savings banks, mutual banks, subsidiaries of any
of the foregoing, or bank holding companies shall comply with all requirements
imposed upon authorized delegates under the act;
(e) The provision of electronic transfer of government benefits for any
federal, state, or county governmental agency, as defined in Consumer Financial
Protection Bureau Regulation E, 12 C.F.R. part 1005, as such regulation existed
on January 1, 2013, by a contractor for and on behalf of the United States or
any department, agency, or instrumentality thereof or any state or any
political subdivision thereof; or
(f) An operator of a payment system only to the extent that the payment
system provides processing, clearing, or settlement services between or among
persons who are all exempt under this section in connection with wire
transfers, credit card transactions, debit card transactions, automated
clearinghouse transfers, or similar fund transfers.
(2) An authorized delegate of a licensee or of an exempt entity, acting
within the scope of its authority conferred by a written contract as described
in section 8-2739, is not required to obtain a license under the Nebraska Money
Transmitters Act, except that such an authorized delegate shall comply with the
other provisions of the act which apply to money transmission transactions.
Sec. 49. Section 1-201, Uniform Commercial Code, Reissue Revised Statutes
of Nebraska, is amended to read:
1-201 General definitions.
(a) Unless the context otherwise requires, words or phrases defined in
this section, or in the additional definitions contained in other articles of
the Uniform Commercial Code that apply to particular articles or parts thereof,
have the meanings stated.
(b) Subject to definitions contained in other articles of the code that
apply to particular articles or parts thereof:
(1) "Action", in the sense of a judicial proceeding, includes recoupment,
counterclaim, setoff, suit in equity, and any other proceeding in which rights
are determined.
(2) "Aggrieved party" means a party entitled to pursue a remedy.
(3) "Agreement", as distinguished from "contract", means the bargain of
the parties in fact, as found in their language or inferred from other
circumstances, including course of performance, course of dealing, or usage of
trade as provided in section 1-303.
(4) "Bank" means a person engaged in the business of banking and includes
a savings bank, savings and loan association, credit union, and trust company.
(5) "Bearer" means a person in control of a negotiable electronic document
of title or a person in possession of a negotiable instrument, negotiable
tangible document of title, or certificated security that is payable to bearer
or indorsed in blank.
(6) "Bill of lading" means a document of title evidencing the receipt of
goods for shipment issued by a person engaged in the business of directly or
indirectly transporting or forwarding goods. The term does not include a
warehouse receipt.
(7) "Branch" includes a separately incorporated foreign branch of a bank.
(8) "Burden of establishing" a fact means the burden of persuading the
trier of fact that the existence of the fact is more probable than its
nonexistence.
(9) "Buyer in ordinary course of business" means a person that buys goods
in good faith, without knowledge that the sale violates the rights of another
person in the goods, and in the ordinary course from a person, other than a
pawnbroker, in the business of selling goods of that kind. A person buys goods
in the ordinary course if the sale to the person comports with the usual or
customary practices in the kind of business in which the seller is engaged or
with the seller's own usual or customary practices. A person that sells oil,
gas, or other minerals at the wellhead or minehead is a person in the business
of selling goods of that kind. A buyer in ordinary course of business may buy
for cash, by exchange of other property, or on secured or unsecured credit, and
may acquire goods or documents of title under a preexisting contract for sale.
Only a buyer that takes possession of the goods or has a right to recover the
goods from the seller under article 2 may be a buyer in ordinary course of
business. "Buyer in ordinary course of business" does not include a person that
acquires goods in a transfer in bulk or as security for or in total or partial
satisfaction of a money debt.
(10) "Conspicuous", with reference to a term, means so written, displayed,
or presented that a reasonable person against which it is to operate ought to
have noticed it. Whether a term is "conspicuous" or not is a decision for the
court. Conspicuous terms include the following:
(A) a heading in capitals equal to or greater in size than the surrounding
text, or in contrasting type, font, or color to the surrounding text of the
same or lesser size; and
(B) language in the body of a record or display in larger type than the
surrounding text, or in contrasting type, font, or color to the surrounding
text of the same size, or set off from surrounding text of the same size by
symbols or other marks that call attention to the language.
(11) "Consumer" means an individual who enters into a transaction
primarily for personal, family, or household purposes.
(12) "Contract", as distinguished from "agreement", means the total legal
obligation that results from the parties' agreement as determined by the
Uniform Commercial Code as supplemented by any other applicable laws.
(13) "Creditor" includes a general creditor, a secured creditor, a lien
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creditor, and any representative of creditors, including an assignee for the
benefit of creditors, a trustee in bankruptcy, a receiver in equity, and a
personal representative, an executor, or an administrator of an insolvent
debtor's or assignor's estate.
(14) "Defendant" includes a person in the position of defendant in a
counterclaim, cross-claim, or third-party claim.
(15) "Delivery" with respect to an electronic document of title means
voluntary transfer of control and with respect to an instrument, a tangible
document of title, or chattel paper means voluntary transfer of possession.
(16) "Document of title" means a record (i) that in the regular course of
business or financing is treated as adequately evidencing that the person in
possession or control of the record is entitled to receive, control, hold, and
dispose of the record and the goods the record covers and (ii) that purports to
be issued by or addressed to a bailee and to cover goods in the bailee's
possession which are either identified or are fungible portions of an
identified mass. The term includes a bill of lading, transport document, dock
warrant, dock receipt, warehouse receipt, and order for delivery of goods. An
electronic document of title means a document of title evidenced by a record
consisting of information stored in an electronic medium. A tangible document
of title means a document of title evidenced by a record consisting of
information that is inscribed on a tangible medium.
(16A) "Electronic" means relating to technology having electrical,
digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.
(17) "Fault" means a default, breach, or wrongful act or omission.
(18) "Fungible goods" means:
(A) goods of which any unit, by nature or usage of trade, is the
equivalent of any other like unit; or
(B) goods that by agreement are treated as equivalent.
(19) "Genuine" means free of forgery or counterfeiting.
(20) "Good faith" means honesty in fact in the conduct or transaction
concerned.
(21) "Holder" means:
(A) the person in possession of a negotiable instrument that is payable
either to bearer or to an identified person that is the person in possession;
(B) the person in possession of a negotiable tangible document of title if
the goods are deliverable either to bearer or to the order of the person in
possession; or
(C) the person in control of a negotiable electronic document of title.
(22) "Insolvency proceeding" includes an assignment for the benefit of
creditors or other proceeding intended to liquidate or rehabilitate the estate
of the person involved.
(23) "Insolvent" means:
(A) having generally ceased to pay debts in the ordinary course of
business other than as a result of bona fide dispute;
(B) being unable to pay debts as they become due; or
(C) being insolvent within the meaning of federal bankruptcy law.
(24) "Money" means a medium of exchange currently authorized or adopted by
a domestic or foreign government. The term includes a monetary unit of account
established by an intergovernmental organization or by agreement between two or
more countries.
(25) "Organization" means a person other than an individual.
(26) "Party", as distinguished from "third party", means a person that has
engaged in a transaction or made an agreement subject to the Uniform Commercial
Code.
(27) "Person" means an individual, corporation, business trust, estate,
trust, partnership, limited liability company, association, joint venture,
government, governmental subdivision, agency, or instrumentality, public
corporation, or any other legal or commercial entity.
(28) "Present value" means the amount as of a date certain of one or more
sums payable in the future, discounted to the date certain by use of either an
interest rate specified by the parties if that rate is not manifestly
unreasonable at the time the transaction is entered into or, if an interest
rate is not so specified, a commercially reasonable rate that takes into
account the facts and circumstances at the time the transaction is entered
into.
(29) "Purchase" means taking by sale, lease, discount, negotiation,
mortgage, pledge, lien, security interest, issue or reissue, gift, or any other
voluntary transaction creating an interest in property.
(30) "Purchaser" means a person that takes by purchase.
(31) "Record" means information that is inscribed on a tangible medium or
that is stored in an electronic or other medium and is retrievable in
perceivable form.
(32) "Remedy" means any remedial right to which an aggrieved party is
entitled with or without resort to a tribunal.
(33) "Representative" means a person empowered to act for another,
including an agent, an officer of a corporation or association, and a trustee,
a personal representative, an executor, or an administrator of an estate.
(34) "Right" includes remedy.
(35) "Security interest" means an interest in personal property or
fixtures which secures payment or performance of an obligation. "Security
interest" includes any interest of a consignor and a buyer of accounts, chattel
paper, a payment intangible, or a promissory note in a transaction that is
subject to article 9. "Security interest" does not include the special property
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interest of a buyer of goods on identification of those goods to a contract for
sale under section 2-401, but a buyer may also acquire a "security interest" by
complying with article 9. Except as otherwise provided in section 2-505, the
right of a seller or lessor of goods under article 2 or 2A to retain or acquire
possession of the goods is not a "security interest", but a seller or lessor
may also acquire a "security interest" by complying with article 9. The
retention or reservation of title by a seller of goods notwithstanding shipment
or delivery to the buyer under section 2-401 is limited in effect to a
reservation of a "security interest". Whether a transaction in the form of a
lease creates a "security interest" is determined pursuant to section 1-203.
"Security interest" does not include a consumer rental purchase agreement as
defined in the Consumer Rental Purchase Agreement Act.
(36) "Send" in connection with a writing, record, or notice means:
(A) to deposit in the mail or deliver for transmission by any other usual
means of communication with postage or cost of transmission provided for and
properly addressed and, in the case of an instrument, to an address specified
thereon or otherwise agreed, or if there be none to any address reasonable
under the circumstances; or
(B) in any other way to cause to be received any record or notice within
the time it would have arrived if properly sent.
(37) "Signed" includes using any symbol executed or adopted with present
intention to adopt or accept a writing.
(38) "State" means a state of the United States, the District of Columbia,
Puerto Rico, the United States Virgin Islands, or any territory or insular
possession subject to the jurisdiction of the United States.
(39) "Surety" includes a guarantor or other secondary obligor.
(40) "Term" means a portion of an agreement that relates to a particular
matter.
(41) "Unauthorized signature" means a signature made without actual,
implied, or apparent authority. The term includes a forgery.
(42) "Warehouse receipt" means a receipt issued by a person engaged in the
business of storing goods for hire.
(43) "Writing" includes printing, typewriting, or any other intentional
reduction to tangible form. "Written" has a corresponding meaning.
Sec. 50. Section 9-102, Uniform Commercial Code, Reissue Revised Statutes
of Nebraska, is amended to read:
9-102 Definitions and index of definitions.
(a) In this article:
(1) "Accession" means goods that are physically united with other goods in
such a manner that the identity of the original goods is not lost.
(2) "Account", except as used in "account for", means a right to payment
of a monetary obligation, whether or not earned by performance, (i) for
property that has been or is to be sold, leased, licensed, assigned, or
otherwise disposed of, (ii) for services rendered or to be rendered, (iii) for
a policy of insurance issued or to be issued, (iv) for a secondary obligation
incurred or to be incurred, (v) for energy provided or to be provided, (vi) for
the use or hire of a vessel under a charter or other contract, (vii) arising
out of the use of a credit or charge card or information contained on or for
use with the card, or (viii) as winnings in a lottery or other game of chance
operated or sponsored by a state, governmental unit of a state, or person
licensed or authorized to operate the game by a state or governmental unit of a
state. The term includes health-care-insurance receivables. The term does not
include (i) rights to payment evidenced by chattel paper or an instrument, (ii)
commercial tort claims, (iii) deposit accounts, (iv) investment property, (v)
letter-of-credit rights or letters of credit, or (vi) rights to payment for
money or funds advanced or sold, other than rights arising out of the use of a
credit or charge card or information contained on or for use with the card.
(3) "Account debtor" means a person obligated on an account, chattel
paper, or general intangible. The term does not include persons obligated to
pay a negotiable instrument, even if the instrument constitutes part of chattel
paper.
(4) "Accounting", except as used in "accounting for", means a record:
(A) authenticated by a secured party;
(B) indicating the aggregate unpaid secured obligations as of a date not
more than thirty-five days earlier or thirty-five days later than the date of
the record; and
(C) identifying the components of the obligations in reasonable detail.
(5) "Agricultural lien" means an interest in farm products:
(A) which secures payment or performance of an obligation for:
(i) goods or services furnished in connection with a debtor's farming
operation; or
(ii) rent on real property leased by a debtor in connection with its
farming operation;
(B) which is created by statute in favor of a person that:
(i) in the ordinary course of its business furnished goods or services to
a debtor in connection with a debtor's farming operation; or
(ii) leased real property to a debtor in connection with the debtor's
farming operation; and
(C) whose effectiveness does not depend on the person's possession of the
personal property.
The term also includes every lien created under sections 52-202, 52-501,
52-701, 52-901, 52-1101, 52-1201, 54-201, and 54-208, Reissue Revised Statutes
of Nebraska, and Chapter 52, article 14, Reissue Revised Statutes of Nebraska.
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(6) "As-extracted collateral" means:
(A) oil, gas, or other minerals that are subject to a security interest
that:
(i) is created by a debtor having an interest in the minerals before
extraction; and
(ii) attaches to the minerals as extracted; or
(B) accounts arising out of the sale at the wellhead or minehead of oil,
gas, or other minerals in which the debtor had an interest before extraction.
(7) "Authenticate" means:
(A) to sign; or
(B) with present intent to adopt or accept a record, to attach to or
logically associate with the record an electronic sound, symbol, or process.
(8) "Bank" means an organization that is engaged in the business of
banking. The term includes savings banks, savings and loan associations, credit
unions, and trust companies.
(9) "Cash proceeds" means proceeds that are money, checks, deposit
accounts, or the like.
(10) "Certificate of title" means a certificate of title with respect to
which a statute provides for the security interest in question to be indicated
on the certificate as a condition or result of the security interest's
obtaining priority over the rights of a lien creditor with respect to the
collateral. The term includes another record maintained as an alternative to a
certificate of title by the governmental unit that issues certificates of title
if a statute permits the security interest in question to be indicated on the
record as a condition or result of the security interest's obtaining priority
over the rights of a lien creditor with respect to the collateral.
(11) "Chattel paper" means a record or records that evidence both a
monetary obligation and a security interest in specific goods, a security
interest in specific goods and software used in the goods, a security interest
in specific goods and license of software used in the goods, a lease of
specific goods, or a lease of specific goods and license of software used in
the goods. In this subdivision, "monetary obligation" means a monetary
obligation secured by the goods or owed under a lease of the goods and includes
a monetary obligation with respect to software used in the goods. The term does
not include (i) charters or other contracts involving the use or hire of a
vessel or (ii) records that evidence a right to payment arising out of the use
of a credit or charge card or information contained on or for use with the
card. If a transaction is evidenced by records that include an instrument or
series of instruments, the group of records taken together constitutes chattel
paper.
(12) "Collateral" means the property subject to a security interest or
agricultural lien. The term includes:
(A) proceeds to which a security interest attaches;
(B) accounts, chattel paper, payment intangibles, and promissory notes
that have been sold; and
(C) goods that are the subject of a consignment.
(13) "Commercial tort claim" means a claim arising in tort with respect to
which:
(A) the claimant is an organization; or
(B) the claimant is an individual and the claim:
(i) arose in the course of the claimant's business or profession; and
(ii) does not include damages arising out of personal injury to or the
death of an individual.
(14) "Commodity account" means an account maintained by a commodity
intermediary in which a commodity contract is carried for a commodity customer.
(15) "Commodity contract" means a commodity futures contract, an option on
a commodity futures contract, a commodity option, or another contract if the
contract or option is:
(A) traded on or subject to the rules of a board of trade that has been
designated as a contract market for such a contract pursuant to federal
commodities laws; or
(B) traded on a foreign commodity board of trade, exchange, or market, and
is carried on the books of a commodity intermediary for a commodity customer.
(16) "Commodity customer" means a person for which a commodity
intermediary carries a commodity contract on its books.
(17) "Commodity intermediary" means a person that:
(A) is registered as a futures commission merchant under federal
commodities law; or
(B) in the ordinary course of its business provides clearance or
settlement services for a board of trade that has been designated as a contract
market pursuant to federal commodities law.
(18) "Communicate" means:
(A) to send a written or other tangible record;
(B) to transmit a record by any means agreed upon by the persons sending
and receiving the record; or
(C) in the case of transmission of a record to or by a filing office, to
transmit a record by any means prescribed by filing-office rule.
(19) "Consignee" means a merchant to which goods are delivered in a
consignment.
(20) "Consignment" means a transaction, regardless of its form, in which a
person delivers goods to a merchant for the purpose of sale and:
(A) the merchant:
(i) deals in goods of that kind under a name other than the name of the
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person making delivery;
(ii) is not an auctioneer; and
(iii) is not generally known by its creditors to be substantially engaged
in selling the goods of others;
(B) with respect to each delivery, the aggregate value of the goods is one
thousand dollars or more at the time of delivery;
(C) the goods are not consumer goods immediately before delivery; and
(D) the transaction does not create a security interest that secures an
obligation.
(21) "Consignor" means a person that delivers goods to a consignee in a
consignment.
(22) "Consumer debtor" means a debtor in a consumer transaction.
(23) "Consumer goods" means goods that are used or bought for use
primarily for personal, family, or household purposes.
(24) "Consumer-goods transaction" means a consumer transaction in which:
(A) an individual incurs an obligation primarily for personal, family, or
household purposes; and
(B) a security interest in consumer goods secures the obligation.
(25) "Consumer obligor" means an obligor who is an individual and who
incurred the obligation as part of a transaction entered into primarily for
personal, family, or household purposes.
(26) "Consumer transaction" means a transaction in which (i) an individual
incurs an obligation primarily for personal, family, or household purposes,
(ii) a security interest secures the obligation, and (iii) the collateral is
held or acquired primarily for personal, family, or household purposes. The
term includes consumer-goods transactions.
(27) "Continuation statement" means an amendment of a financing statement
which:
(A) identifies, by its file number, the initial financing statement to
which it relates; and
(B) indicates that it is a continuation statement for, or that it is filed
to continue the effectiveness of, the identified financing statement.
(28) "Debtor" means:
(A) a person having an interest, other than a security interest or other
lien, in the collateral, whether or not the person is an obligor;
(B) a seller of accounts, chattel paper, payment intangibles, or
promissory notes; or
(C) a consignee.
(29) "Deposit account" means a demand, time, savings, passbook, or similar
account maintained with a bank. The term does not include investment property
or accounts evidenced by an instrument.
(30) "Document" means a document of title or a receipt of the type
described in section 7-201(b).
(31) "Electronic chattel paper" means chattel paper evidenced by a record
or records consisting of information stored in an electronic medium.
(32) "Encumbrance" means a right, other than an ownership interest, in
real property. The term includes mortgages and other liens on real property.
(33) "Equipment" means goods other than inventory, farm products, or
consumer goods.
(34) "Farm products" means goods, other than standing timber, with respect
to which the debtor is engaged in a farming operation and which are:
(A) crops grown, growing, or to be grown, including:
(i) crops produced on trees, vines, and bushes; and
(ii) aquatic goods produced in aquacultural operations;
(B) livestock, born or unborn, including aquatic goods produced in
aquacultural operations;
(C) supplies used or produced in a farming operation; or
(D) products of crops or livestock in their unmanufactured states.
(35) "Farming operation" means raising, cultivating, propagating,
fattening, grazing, or any other farming, livestock, or aquacultural operation.
(36) "File number" means the number assigned to an initial financing
statement pursuant to section 9-519(a).
(37) "Filing office" means an office designated in section 9-501 as the
place to file a financing statement.
(38) "Filing-office rule" means a rule adopted pursuant to section 9-526.
(39) "Financing statement" means a record or records composed of an
initial financing statement and any filed record relating to the initial
financing statement.
(40) "Fixture filing" means the filing of a financing statement covering
goods that are or are to become fixtures and satisfying section 9-502(a) and
(b). The term includes the filing of a financing statement covering goods of a
transmitting utility which are or are to become fixtures.
(41) "Fixtures" means goods that have become so related to particular real
property that an interest in them arises under real property law.
(42) "General intangible" means any personal property, including things in
action, other than accounts, chattel paper, commercial tort claims, deposit
accounts, documents, goods, instruments, investment property, letter-of-credit
rights, letters of credit, money, and oil, gas, or other minerals before
extraction. The term includes payment intangibles and software.
(43) "Good faith" means honesty in fact and the observance of reasonable
commercial standards of fair dealing.
(44) "Goods" means all things that are movable when a security interest
attaches. The term includes (i) fixtures, (ii) standing timber that is to be
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cut and removed under a conveyance or contract for sale, (iii) the unborn young
of animals, (iv) crops grown, growing, or to be grown, even if the crops are
produced on trees, vines, or bushes, and (v) manufactured homes. The term also
includes a computer program embedded in goods and any supporting information
provided in connection with a transaction relating to the program if (i) the
program is associated with the goods in such a manner that it customarily is
considered part of the goods, or (ii) by becoming the owner of the goods, a
person acquires a right to use the program in connection with the goods. The
term does not include a computer program embedded in goods that consist solely
of the medium in which the program is embedded. The term also does not include
accounts, chattel paper, commercial tort claims, deposit accounts, documents,
general intangibles, instruments, investment property, letter-of-credit rights,
letters of credit, money, or oil, gas, or other minerals before extraction.
(45) "Governmental unit" means a subdivision, agency, department, county,
parish, municipality, or other unit of the government of the United States, a
state, or a foreign country. The term includes an organization having a
separate corporate existence if the organization is eligible to issue debt on
which interest is exempt from income taxation under the laws of the United
States.
(46) "Health-care-insurance receivable" means an interest in or claim
under a policy of insurance which is a right to payment of a monetary
obligation for health-care goods or services provided or to be provided.
(47) "Instrument" means a negotiable instrument or any other writing that
evidences a right to the payment of a monetary obligation, is not itself a
security agreement or lease, and is of a type that in ordinary course of
business is transferred by delivery with any necessary indorsement or
assignment including, but not limited to, a writing that would otherwise
qualify as a certificate of deposit (defined in section 3-104(j)) but for the
fact that the writing contains a limitation on transfer. The term does not
include (i) investment property, (ii) letters of credit, or (iii) writings that
evidence a right to payment arising out of the use of a credit or charge card
or information contained on or for use with the card.
(48) "Inventory" means goods, other than farm products, which:
(A) are leased by a person as lessor;
(B) are held by a person for sale or lease or to be furnished under a
contract of service;
(C) are furnished by a person under a contract of service; or
(D) consist of raw materials, work in process, or materials used or
consumed in a business.
(49) "Investment property" means a security, whether certificated or
uncertificated, security entitlement, securities account, commodity contract,
or commodity account.
(50) "Jurisdiction of organization", with respect to a registered
organization, means the jurisdiction under whose law the organization is formed
or organized.
(51) "Letter-of-credit right" means a right to payment or performance
under a letter of credit, whether or not the beneficiary has demanded or is at
the time entitled to demand payment or performance. The term does not include
the right of a beneficiary to demand payment or performance under a letter of
credit.
(52) "Lien creditor" means:
(A) a creditor that has acquired a lien on the property involved by
attachment, levy, or the like;
(B) an assignee for benefit of creditors from the time of assignment;
(C) a trustee in bankruptcy from the date of the filing of the petition;
or
(D) a receiver in equity from the time of appointment.
(53) "Manufactured home" means a structure, transportable in one or more
sections, which, in the traveling mode, is eight body feet or more in width or
forty body feet or more in length, or, when erected on site, is three hundred
twenty or more square feet, and which is built on a permanent chassis and
designed to be used as a dwelling with or without a permanent foundation when
connected to the required utilities, and includes the plumbing, heating, air-
conditioning, and electrical systems contained therein. The term includes any
structure that meets all of the requirements of this subdivision except the
size requirements and with respect to which the manufacturer voluntarily files
a certification required by the United States Secretary of Housing and Urban
Development and complies with the standards established under Title 42 of the
United States Code.
(54) "Manufactured-home transaction" means a secured transaction:
(A) that creates a purchase-money security interest in a manufactured
home, other than a manufactured home held as inventory; or
(B) in which a manufactured home, other than a manufactured home held as
inventory, is the primary collateral.
(55) "Mortgage" means a consensual interest in real property, including
fixtures, which secures payment or performance of an obligation.
(56) "New debtor" means a person that becomes bound as debtor under
section 9-203(d) by a security agreement previously entered into by another
person.
(57) "New value" means (i) money, (ii) money's worth in property,
services, or new credit, or (iii) release by a transferee of an interest in
property previously transferred to the transferee. The term does not include an
obligation substituted for another obligation.
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(58) "Noncash proceeds" means proceeds other than cash proceeds.
(59) "Obligor" means a person that, with respect to an obligation secured
by a security interest in or an agricultural lien on the collateral, (i) owes
payment or other performance of the obligation, (ii) has provided property
other than the collateral to secure payment or other performance of the
obligation, or (iii) is otherwise accountable in whole or in part for payment
or other performance of the obligation. The term does not include issuers or
nominated persons under a letter of credit.
(60) "Original debtor", except as used in section 9-310(c), means a person
that, as debtor, entered into a security agreement to which a new debtor has
become bound under section 9-203(d).
(61) "Payment intangible" means a general intangible under which the
account debtor's principal obligation is a monetary obligation.
(62) "Person related to", with respect to an individual, means:
(A) the spouse of the individual;
(B) a brother, brother-in-law, sister, or sister-in-law of the individual;
(C) an ancestor or lineal descendant of the individual or the individual's
spouse; or
(D) any other relative, by blood or marriage, of the individual or the
individual's spouse who shares the same home with the individual.
(63) "Person related to", with respect to an organization, means:
(A) a person directly or indirectly controlling, controlled by, or under
common control with the organization;
(B) an officer or director of, or a person performing similar functions
with respect to, the organization;
(C) an officer or director of, or a person performing similar functions
with respect to, a person described in subdivision (A);
(D) the spouse of an individual described in subdivision (A), (B), or (C);
or
(E) an individual who is related by blood or marriage to an individual
described in subdivision (A), (B), (C), or (D) and shares the same home with
the individual.
(64) "Proceeds", except as used in section 9-609(b), means the following
property:
(A) whatever is acquired upon the sale, lease, license, exchange, or other
disposition of collateral;
(B) whatever is collected on, or distributed on account of, collateral;
(C) rights arising out of collateral;
(D) to the extent of the value of collateral, claims arising out of the
loss, nonconformity, or interference with the use of, defects or infringement
of rights in, or damage to, the collateral; or
(E) to the extent of the value of collateral and to the extent payable to
the debtor or the secured party, insurance payable by reason of the loss or
nonconformity of, defects or infringement of rights in, or damage to, the
collateral.
(65) "Promissory note" means an instrument that evidences a promise to pay
a monetary obligation, does not evidence an order to pay, and does not contain
an acknowledgment by a bank that the bank has received for deposit a sum of
money or funds.
(66) "Proposal" means a record authenticated by a secured party which
includes the terms on which the secured party is willing to accept collateral
in full or partial satisfaction of the obligation it secures pursuant to
sections 9-620, 9-621, and 9-622.
(67) "Public-finance transaction" means a secured transaction in
connection with which:
(A) debt securities are issued;
(B) all or a portion of the securities issued have an initial stated
maturity of at least twenty years; and
(C) the debtor, obligor, secured party, account debtor or other person
obligated on collateral, assignor or assignee of a secured obligation, or
assignor or assignee of a security interest is a state or a governmental unit
of a state.
(68) "Public organic record" means a record that is available to the
public for inspection and is:
(A) a record consisting of the record initially filed with or issued by a
state or the United States to form or organize an organization and any record
filed with or issued by the state or the United States which amends or restates
the initial record;
(B) an organic record of a business trust consisting of the record
initially filed with a state and any record filed with the state which amends
or restates the initial record, if a statute of the state governing business
trusts requires that the record be filed with the state; or
(C) a record consisting of legislation enacted by the legislature of a
state or the Congress of the United States which forms or organizes an
organization, any record amending the legislation, and any record filed with or
issued by the state or United States which amends or restates the name of the
organization.
(69) "Pursuant to commitment", with respect to an advance made or other
value given by a secured party, means pursuant to the secured party's
obligation, whether or not a subsequent event of default or other event not
within the secured party's control has relieved or may relieve the secured
party from its obligation.
(70) "Record", except as used in "for record", "of record", "record or
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legal title", and "record owner", means information that is inscribed on a
tangible medium or which is stored in an electronic or other medium and is
retrievable in perceivable form.
(71) "Registered organization" means an organization formed or organized
solely under the law of a single state or the United States by the filing of a
public organic record with, the issuance of a public organic record by, or the
enactment of legislation by the state or the United States. The term includes a
business trust that is formed or organized under the law of a single state if a
statute of the state governing business trusts requires that the business
trust's organic record be filed with the state.
(72) "Secondary obligor" means an obligor to the extent that:
(A) the obligor's obligation is secondary; or
(B) the obligor has a right of recourse with respect to an obligation
secured by collateral against the debtor, another obligor, or property of
either.
(73) "Secured party" means:
(A) a person in whose favor a security interest is created or provided for
under a security agreement, whether or not any obligation to be secured is
outstanding;
(B) a person that holds an agricultural lien;
(C) a consignor;
(D) a person to which accounts, chattel paper, payment intangibles, or
promissory notes have been sold;
(E) a trustee, indenture trustee, agent, collateral agent, or other
representative in whose favor a security interest or agricultural lien is
created or provided for; or
(F) a person that holds a security interest arising under section 2-401,
2-505, 2-711(3), 2A-508(5), 4-210, or 5-118.
(74) "Security agreement" means an agreement that creates or provides for
a security interest.
(75) "Send", in connection with a record or notification, means:
(A) to deposit in the mail, deliver for transmission, or transmit by any
other usual means of communication, with postage or cost of transmission
provided for, addressed to any address reasonable under the circumstances; or
(B) to cause the record or notification to be received within the time
that it would have been received if properly sent under subdivision (A).
(76) "Software" means a computer program and any supporting information
provided in connection with a transaction relating to the program. The term
does not include a computer program that is included in the definition of
goods.
(77) "State" means a state of the United States, the District of Columbia,
Puerto Rico, the United States Virgin Islands, or any territory or insular
possession subject to the jurisdiction of the United States.
(78) "Supporting obligation" means a letter-of-credit right or secondary
obligation that supports the payment or performance of an account, chattel
paper, a document, a general intangible, an instrument, or investment property.
(79) "Tangible chattel paper" means chattel paper evidenced by a record or
records consisting of information that is inscribed on a tangible medium.
(80) "Termination statement" means an amendment of a financing statement
which:
(A) identifies, by its file number, the initial financing statement to
which it relates; and
(B) indicates either that it is a termination statement or that the
identified financing statement is no longer effective.
(81) "Transmitting utility" means a person primarily engaged in the
business of:
(A) operating a railroad, subway, street railway, or trolley bus;
(B) transmitting communications electrically, electromagnetically, or by
light;
(C) transmitting goods by pipeline or sewer; or
(D) transmitting or producing and transmitting electricity, steam, gas, or
water.
(b) "Control" as provided in section 7-106 and the following definitions
in other articles apply to this article:
"Applicant". Section 5-102.
"Beneficiary". Section 5-102.
"Broker". Section 8-102.
"Certificated security". Section 8-102.
"Check". Section 3-104.
"Clearing corporation". Section 8-102.
"Contract for sale". Section 2-106.
"Controllable electronic record". Section 12-102.
"Customer". Section 4-104.
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"Entitlement holder". Section 8-102.
"Financial asset". Section 8-102.
"Holder in due course". Section 3-302.
"Issuer" (with respect to
a letter of credit or
letter-of-credit right). Section 5-102.
"Issuer" (with respect to
a security). Section 8-201.
"Issuer" (with respect to
a document of title). Section 7-102.
"Lease". Section 2A-103.
"Lease agreement". Section 2A-103.
"Lease contract". Section 2A-103.
"Leasehold interest". Section 2A-103.
"Lessee". Section 2A-103.
"Lessee in ordinary course
of business". Section 2A-103.
"Lessor". Section 2A-103.
"Lessor's residual interest". Section 2A-103.
"Letter of credit". Section 5-102.
"Merchant". Section 2-104.
"Negotiable instrument". Section 3-104.
"Nominated person". Section 5-102.
"Note". Section 3-104.
"Proceeds of a letter of credit". Section 5-114.
"Prove". Section 3-103.
"Sale". Section 2-106.
"Securities account". Section 8-501.
"Securities intermediary". Section 8-102.
"Security". Section 8-102.
"Security certificate". Section 8-102.
"Security entitlement". Section 8-102.
"Uncertificated security". Section 8-102.
(c) Article 1 contains general definitions and principles of construction
and interpretation applicable throughout this article.
Sec. 51. The Uniform Commercial Code is amended by adding new section:
9-107A
Control of account, payment intangible, or controllable electronic record.
(a) A secured party has "control" of an account or payment intangible if:
(1) the account or payment intangible is included in the benefit that can
be derived from a controllable electronic record; and
(2) the secured party has control of the controllable electronic record.
(b) A secured party has "control" of a controllable electronic record as
provided in section 12-105.
Sec. 52. Section 9-301, Uniform Commercial Code, Reissue Revised Statutes
of Nebraska, is amended to read:
9-301 Law governing perfection and priority of security interests.
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Except as otherwise provided in sections 9-303 to 9-306, the following
rules determine the law governing perfection, the effect of perfection or
nonperfection, and the priority of a security interest in collateral:
(1) Except as otherwise provided in this section, while a debtor is
located in a jurisdiction, the local law of that jurisdiction governs
perfection, the effect of perfection or nonperfection, and the priority of a
security interest in collateral.
(2) While collateral is located in a jurisdiction, the local law of that
jurisdiction governs perfection, the effect of perfection or nonperfection, and
the priority of a possessory security interest in that collateral.
(3) Except as otherwise provided in subdivision (4), while tangible
negotiable documents, goods, instruments, money, or tangible chattel paper is
located in a jurisdiction, the local law of that jurisdiction governs:
(A) perfection of a security interest in the goods by filing a fixture
filing;
(B) perfection of a security interest in timber to be cut; and
(C) the effect of perfection or nonperfection and the priority of a
nonpossessory security interest in the collateral.
(4) The local law of the jurisdiction in which the wellhead or minehead is
located governs perfection, the effect of perfection or nonperfection, and the
priority of a security interest in as-extracted collateral.
(5) While a debtor is located in a jurisdiction that is not a state, the
local law of the State of Nebraska governs:
(A) perfection by control of a security interest in an account,
controllable electronic record, or payment intangible; and
(B) the effect of perfection or nonperfection and the priority of a
security interest in an account, controllable electronic record, or payment
intangible perfected by control.
Sec. 53. Section 9-310, Uniform Commercial Code, Reissue Revised Statutes
of Nebraska, is amended to read:
9-310 When filing required to perfect security interest or agricultural
lien; security interests and agricultural liens to which filing provisions do
not apply.
(a) Except as otherwise provided in subsection (b) and section 9-312(b), a
financing statement must be filed to perfect all security interests and
agricultural liens.
(b) The filing of a financing statement is not necessary to perfect a
security interest:
(1) that is perfected under section 9-308(d), (e), (f), or (g);
(2) that is perfected under section 9-309 when it attaches;
(3) in property subject to a statute, regulation, or treaty described in
section 9-311(a);
(4) in goods in possession of a bailee which is perfected under section
9-312(d)(1) or (2);
(5) in certificated securities, documents, goods, or instruments which is
perfected without filing, control, or possession under section 9-312(e), (f),
or (g);
(6) in collateral in the secured party's possession under section 9-313;
(7) in a certificated security which is perfected by delivery of the
security certificate to the secured party under section 9-313;
(8) in deposit accounts, electronic chattel paper, electronic documents,
investment property, accounts, payment intangibles, controllable electronic
records, or letter-of-credit rights which is perfected by control under section
9-314;
(9) in proceeds which is perfected under section 9-315; or
(10) that is perfected under section 9-316.
(c) If a secured party assigns a perfected security interest or
agricultural lien, a filing under this article is not required to continue the
perfected status of the security interest against creditors of and transferees
from the original debtor.
Sec. 54. Section 9-312, Uniform Commercial Code, Reissue Revised Statutes
of Nebraska, is amended to read:
9-312 Perfection of security interests in chattel paper, deposit accounts,
documents, goods covered by documents, instruments, investment property,
controllable electronic records, certain accounts and payment intangibles,
letter-of-credit rights, and money; perfection by permissive filing; temporary
perfection without filing or transfer of possession.
(a) A security interest in chattel paper, negotiable documents,
instruments, or investment property, controllable electronic records, and
accounts or payment intangibles that are included in the benefit that can be
derived from a controllable electronic record may be perfected by filing.
(b) Except as otherwise provided in section 9-315(c) and (d) for proceeds:
(1) a security interest in a deposit account may be perfected only by
control under section 9-314;
(2) and except as otherwise provided in section 9-308(d), a security
interest in a letter-of-credit right may be perfected only by control under
section 9-314; and
(3) a security interest in money may be perfected only by the secured
party's taking possession under section 9-313.
(c) While goods are in the possession of a bailee that has issued a
negotiable document covering the goods:
(1) a security interest in the goods may be perfected by perfecting a
security interest in the document; and
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(2) a security interest perfected in the document has priority over any
security interest that becomes perfected in the goods by another method during
that time.
(d) While goods are in the possession of a bailee that has issued a
nonnegotiable document covering the goods, a security interest in the goods may
be perfected by:
(1) issuance of a document in the name of the secured party;
(2) the bailee's receipt of notification of the secured party's interest;
or
(3) filing as to the goods.
(e) A security interest in certificated securities, negotiable documents,
or instruments is perfected without filing or the taking of possession or
control for a period of twenty days from the time it attaches to the extent
that it arises for new value given under an authenticated security agreement.
(f) A perfected security interest in a negotiable document or goods in
possession of a bailee, other than one that has issued a negotiable document
for the goods, remains perfected for twenty days without filing if the secured
party makes available to the debtor the goods or documents representing the
goods for the purpose of:
(1) ultimate sale or exchange; or
(2) loading, unloading, storing, shipping, transshipping, manufacturing,
processing, or otherwise dealing with them in a manner preliminary to their
sale or exchange.
(g) A perfected security interest in a certificated security or instrument
remains perfected for twenty days without filing if the secured party delivers
the security certificate or instrument to the debtor for the purpose of:
(1) ultimate sale or exchange; or
(2) presentation, collection, enforcement, renewal, or registration of
transfer.
(h) After the twenty-day period specified in subsection (e), (f), or (g)
expires, perfection depends upon compliance with this article.
Sec. 55. Section 9-314, Uniform Commercial Code, Reissue Revised Statutes
of Nebraska, is amended to read:
9-314 Perfection by control.
(a) A security interest in investment property, deposit accounts,
accounts, payment intangibles, controllable electronic records, letter-of-
credit rights, electronic chattel paper, or electronic documents may be
perfected by control of the collateral under section 7-106, 9-104, 9-105,
9-106, or 9-107, or 9-107A.
(b) A security interest in deposit accounts, electronic chattel paper,
accounts, payment intangibles, controllable electronic records, letter-of-
credit rights, or electronic documents is perfected by control under section
7-106, 9-104, 9-105, or 9-107, or 9-107A when the secured party obtains control
and remains perfected by control only while the secured party retains control.
(c) A security interest in investment property is perfected by control
under section 9-106 from the time the secured party obtains control and remains
perfected by control until:
(1) the secured party does not have control; and
(2) one of the following occurs:
(A) if the collateral is a certificated security, the debtor has or
acquires possession of the security certificate;
(B) if the collateral is an uncertificated security, the issuer has
registered or registers the debtor as the registered owner; or
(C) if the collateral is a security entitlement, the debtor is or becomes
the entitlement holder.
Sec. 56. Section 9-331, Uniform Commercial Code, Reissue Revised Statutes
of Nebraska, is amended to read:
9-331 Priority of rights of purchasers of instruments, documents, and
securities, and controllable electronic records under other articles; priority
of interests in financial assets and security entitlements under article 8 and
controllable electronic records under article 12.
(a) This article does not limit the rights of a holder in due course of a
negotiable instrument, a holder to which a negotiable document of title has
been duly negotiated, or a protected purchaser of a security, or a qualified
purchaser of a controllable electronic record. These holders or purchasers take
priority over an earlier security interest, even if perfected, to the extent
provided in articles 3, 7, and 8, and 12.
(b) This article does not limit the rights of or impose liability on a
person to the extent that the person is protected against the assertion of a
claim under article 8 or 12.
(c) Filing under this article does not constitute notice of a claim or
defense to the holders, or purchasers, or persons described in subsections (a)
and (b).
Sec. 57. Section 9-406, Uniform Commercial Code, Reissue Revised Statutes
of Nebraska, is amended to read:
9-406 Discharge of account debtor; notification of assignment;
identification and proof of assignment; restrictions on assignment of accounts,
chattel paper, payment intangibles, and promissory notes ineffective.
(a) Subject to subsections (b) through (i) and (k), an account debtor on
an account, chattel paper, or a payment intangible may discharge its obligation
by paying the assignor until, but not after, the account debtor receives a
notification, authenticated by the assignor or the assignee, that the amount
due or to become due has been assigned and that payment is to be made to the
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assignee. After receipt of the notification, the account debtor may discharge
its obligation by paying the assignee and may not discharge the obligation by
paying the assignor.
(b) Subject to subsections subsection (h) and (k), notification is
ineffective under subsection (a):
(1) if it does not reasonably identify the rights assigned;
(2) to the extent that an agreement between an account debtor and a seller
of a payment intangible limits the account debtor's duty to pay a person other
than the seller and the limitation is effective under law other than this
article; or
(3) at the option of an account debtor, if the notification notifies the
account debtor to make less than the full amount of any installment or other
periodic payment to the assignee, even if:
(A) only a portion of the account, chattel paper, or payment intangible
has been assigned to that assignee;
(B) a portion has been assigned to another assignee; or
(C) the account debtor knows that the assignment to that assignee is
limited.
(c) Subject to subsections subsection (h) and (k), if requested by the
account debtor, an assignee shall seasonably furnish reasonable proof that the
assignment has been made. Unless the assignee complies, the account debtor may
discharge its obligation by paying the assignor, even if the account debtor has
received a notification under subsection (a).
(d) Except as otherwise provided in subsection (e) and sections 2A-303 and
9-407, and subject to subsection (h), a term in an agreement between an account
debtor and an assignor or in a promissory note is ineffective to the extent
that it:
(1) prohibits, restricts, or requires the consent of the account debtor or
person obligated on the promissory note to the assignment or transfer of, or
the creation, attachment, perfection, or enforcement of a security interest in,
the account, chattel paper, payment intangible, or promissory note; or
(2) provides that the assignment or transfer or the creation, attachment,
perfection, or enforcement of the security interest may give rise to a default,
breach, right of recoupment, claim, defense, termination, right of termination,
or remedy under the account, chattel paper, payment intangible, or promissory
note.
(e) Subsection (d) does not apply to the sale of a payment intangible or
promissory note, other than a sale pursuant to a disposition under section
9-610 or an acceptance of collateral under section 9-620.
(f) Except as otherwise provided in sections 2A-303 and 9-407, and subject
to subsections (h) and (i), a rule of law, statute, or regulation that
prohibits, restricts, or requires the consent of a government, governmental
body or official, or account debtor to the assignment or transfer of, or
creation of a security interest in, an account or chattel paper is ineffective
to the extent that the rule of law, statute, or regulation:
(1) prohibits, restricts, or requires the consent of the government,
governmental body or official, or account debtor to the assignment or transfer
of, or the creation, attachment, perfection, or enforcement of a security
interest in the account or chattel paper; or
(2) provides that the assignment or transfer or the creation, attachment,
perfection, or enforcement of the security interest may give rise to a default,
breach, right of recoupment, claim, defense, termination, right of termination,
or remedy under the account or chattel paper.
(g) Subject to subsections subsection (h) and (k), an account debtor may
not waive or vary its option under subdivision (b)(3).
(h) This section is subject to law other than this article which
establishes a different rule for an account debtor who is an individual and who
incurred the obligation primarily for personal, family, or household purposes.
(i) This section does not apply to an assignment of a health-care-
insurance receivable.
(j) This section prevails over any inconsistent provisions of the law of
this state.
(k) Subsections (a) through (c) and (g) do not apply to an account or
payment intangible that is included in the benefit that can be derived from a
controllable electronic record.
Sec. 58. The Uniform Commercial Code is amended by adding new section:
12-101
Short title.
This article may be cited as Uniform Commercial Code – Controllable
Electronic Records.
Sec. 59. The Uniform Commercial Code is amended by adding new section:
12-101A
Intent.
(a) The Joint Committee on the Uniform Commercial Code and Emerging
Technologies of the Uniform Law Commission has developed draft Uniform
Commercial Code provisions governing certain digital assets, specifically those
that fall within the definition of "controllable electronic records". The
current draft has been extensively vetted by those who understand and
participate in digital transactions.
(b) Adoption of the Uniform Law Commission's draft by the 2021 Nebraska
Legislature will create a considerable and necessary advantage for Nebraska to
lead in emerging industries utilizing blockchain, digital ledger technology,
virtual currencies, and other digital assets and would provide a sensible
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framework and legal certainty for transactions of controllable electronic
records. In subsequent sessions, if necessary, the Nebraska Legislature will
review and adopt conforming amendments to the provisions of the Uniform
Commercial Code on controllable electronic records to remain consistent with
the language and intent of the final proposal of the Joint Committee on the
Uniform Commercial Code and Emerging Technologies of the Uniform Law
Commission.
Sec. 60. The Uniform Commercial Code is amended by adding new section:
12-102
Definitions.
(a) In this article, "controllable electronic record" means an electronic
record that can be subjected to control (section 12-105). The term does not
include electronic chattel paper, electronic documents, investment property,
and transferable records under the Uniform Electronic Transactions Act.
(b) The definitions of "account," "account debtor," "authenticate,"
"electronic chattel paper," "investment property," and "payment intangible" in
article 9 apply to this article.
Sec. 61. The Uniform Commercial Code is amended by adding new section:
12-103
Scope.
This article applies to controllable electronic records.
Sec. 62. The Uniform Commercial Code is amended by adding new section:
12-104
Rights in controllable electronic records and certain accounts and payment
intangibles.
(a) In this section:
(1) "Adverse claim" means a claim that a claimant has a property interest
in a controllable electronic record and that it is a violation of the rights of
the claimant for another person to hold, transfer, or deal with the
controllable electronic record.
(2) "Qualified purchaser" means a purchaser of a controllable electronic
record or an interest therein that obtains control of a controllable electronic
record for value and without notice of any adverse claim. The term includes a
person that acquires rights in a controllable electronic record by a transfer
of control under subsection (d).
(b) Subject to subsections (c) through (i), law other than this article 12
determines whether a person acquires rights in a controllable electronic record
and the rights that the person acquires.
(c) A purchaser of a controllable electronic record acquires all rights in
the controllable electronic record that the transferor had or had power to
transfer.
(d) A person having control of, but no rights in, a controllable
electronic record has power to transfer rights in the controllable electronic
record by voluntarily transferring control to a person that obtains control for
value and without notice of any adverse claim.
(e) A purchaser of a limited interest acquires rights only to the extent
of the interest purchased.
(f) In addition to acquiring the rights of a purchaser, a qualified
purchaser acquires its rights in the controllable electronic record and any
account or payment intangible that is included in the benefit that can be
derived from the controllable electronic record free of any adverse claim.
(g) An action based on an adverse claim to a controllable electronic
record or an account or payment intangible that is included in the benefit that
can be derived from a controllable electronic record, whether framed in
conversion, replevin, constructive trust, equitable lien, or other theory, may
not be asserted against a qualified purchaser that acquires its interest in,
and obtains control of, a controllable electronic record for value and without
notice of the adverse claim.
(h) A person has notice of an adverse claim if:
(1) the person knows of the adverse claim; or
(2) the person is aware of facts sufficient to indicate that there is a
significant probability that the adverse claim exists and deliberately avoids
information that would establish the existence of the adverse claim.
(i) Filing of a financing statement under article 9 is not notice of an
adverse claim to a controllable electronic record.
Sec. 63. The Uniform Commercial Code is amended by adding new section:
12-105
Control of controllable electronic record.
(a) A person has "control" of a controllable electronic record if:
(1) the following conditions are met:
(A) the controllable electronic record or the system in which it is
recorded, if any, gives the person:
(i) the power to derive substantially all the benefit from the
controllable electronic record;
(ii) subject to subsection (b), the exclusive power to prevent others from
deriving substantially all the benefit from the controllable electronic record;
and
(iii) subject to subsection (b), the exclusive power to transfer control
of the controllable electronic record to another person or cause another person
to obtain control of a controllable electronic record that derives from the
controllable electronic record; and
(B) the controllable electronic record, a record attached to or logically
associated with the controllable electronic record, or the system in which the
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controllable electronic record is recorded, if any, enables the person to
readily identify itself as having the powers specified in subparagraph (A); or
(2) another person obtains control of the controllable electronic record
on behalf of the person, or having previously obtained control of the
controllable electronic record, acknowledges that it has control on behalf of
the person.
(b) A power specified in subparagraph (a)(1)(A)(ii) or (a)(1)(A)(iii) can
be "exclusive," even if:
(1) the controllable electronic record or the system in which it is
recorded, if any, limits the use to which the controllable electronic record
may be put or has protocols that are programmed to result in a transfer of
control; and
(2) the person has agreed to share the power with another person.
(c) For the purposes of subparagraph (a)(1)(B), a person may be identified
in any way, including by name, identifying number, cryptographic key, office,
or account number.
Sec. 64. The Uniform Commercial Code is amended by adding new section:
12-106
Discharge of account debtor on account or payment intangible included in
controllable electronic record.
(a) Subject to subsections (b) through (f), if an account or payment
intangible is included in the benefit that can be derived from a controllable
electronic record, the account debtor may discharge its obligation on the
account or payment intangible:
(1) by paying the person having control of the controllable electronic
record; or
(2) by paying a person that formerly had control of the controllable
electronic record.
(b) Subject to subsection (f), an account debtor may not discharge its
obligation by paying a person that formerly had control if, before the payment,
the account debtor receives a notification, authenticated by the person having
control, that notifies the account debtor that the person has control of the
controllable electronic record, reasonably identifies the controllable
electronic record, and provides a reasonable method by which the account debtor
is to make payments. After receipt of the notification, the account debtor may
discharge its obligation by paying in accordance with the notification and may
not discharge the obligation by paying a person that formerly had control.
(c) Subject to subsection (f), notification is ineffective under
subsection (b):
(1) to the extent that an agreement between an account debtor and a seller
of a payment intangible limits the account debtor's duty to pay a person other
than the seller and the limitation is effective under law other than this
article; or
(2) at the option of the account debtor, if the notification notifies the
account debtor to divide a payment and send portions by more than one method.
(d) Subject to subsection (f), if requested by the account debtor, the
person giving the notification shall seasonably furnish reasonable proof that
the person has control of the controllable electronic record. Unless the person
complies, the account debtor may discharge its obligation by paying a person
that formerly had control, even if the account debtor has received a
notification under subsection (b).
(e) Subject to subsection (f), an account debtor may not waive or vary its
option under subsection (c)(2).
(f) This section is subject to law other than this article which
establishes a different rule for an account debtor who is an individual and who
incurred the obligation primarily for personal, family, or household purposes.
Sec. 65. The Uniform Commercial Code is amended by adding new section:
12-107
Governing law.
Unless otherwise agreed to by the parties, the laws of the State of
Nebraska shall govern any actions taken pursuant to this article.
Sec. 66. The Uniform Commercial Code is amended by adding new section:
12-108
Applicability.
This article applies to any transaction involving a controllable
electronic record that arises on or after the operative date of this section.
This article does not apply to any transaction involving a controllable
electronic record that arises before the operative date of this section even if
the transaction would be subject to this article if the transaction had arisen
on or after the operative date of this section. This article does not apply to
a right of action with regard to any transaction involving a controllable
electronic record that has accrued before the operative date of this section.
Sec. 67. The Uniform Commercial Code is amended by adding new section:
12-109
Savings clause.
Any transaction involving a controllable electronic record that arose
before the operative date of this section and the rights, obligations, and
interests flowing from that transaction are governed by any statute or other
rule amended or repealed by this legislative bill as if such amendment or
repeal had not occurred and may be terminated, completed, consummated, or
enforced under that statute or other rule.
Sec. 68. Sections 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16,
17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36,
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37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, and 69 of this act become
operative on October 1, 2021. Sections 49, 50, 51, 52, 53, 54, 55, 56, 57, 58,
59, 60, 61, 62, 63, 64, 65, 66, 67, and 70 of this act become operative on July
1, 2022. The other section of this act becomes operative on its effective date.
Sec. 69. Original section 8-115, Reissue Revised Statutes of Nebraska,
and sections 8-101.02, 8-101.03, 8-102, 8-113, 8-148.09, 8-1,140, 8-601, 8-602,
8-701, 8-702, 8-1120, and 8-2724, Revised Statutes Cumulative Supplement, 2020,
are repealed.
Sec. 70. Original sections 1-201, 9-102, 9-301, 9-310, 9-312, 9-314,
9-331, and 9-406, Uniform Commercial Code, Reissue Revised Statutes of
Nebraska, are repealed.
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