Secured Transactions

Definition ∞ Secured Transactions are financial arrangements where a debtor grants a creditor a security interest in specific assets to guarantee the repayment of a debt. If the debtor defaults, the creditor has a legal right to claim and liquidate the collateral to recover the outstanding amount. This mechanism reduces lending risk and is a fundamental component of commercial finance. Its principles are being adapted for digital assets.
Context ∞ The application of secured transactions to digital assets is a key area of legal development, particularly concerning how security interests are created, perfected, and enforced on a blockchain. Legal experts and policymakers are examining how existing commercial law frameworks can accommodate the unique characteristics of cryptoassets. Clarity in this area is crucial for enabling robust lending markets and mitigating risks in digital asset finance.