ARTHUR E. WILMARTH, George Washington University Law School
Email: awilmarth@law.gwu.edu

In November 2021, the President’s Working Group on Financial Markets (PWG) issued a report analyzing the rapid expansion and growing risks of the stablecoin market. PWG’s report determined that stablecoins pose a wide range of potential hazards, including the risks of inflicting large losses on investors, destabilizing financial markets and the payments system, supporting money laundering, tax evasion, and other forms of illicit finance, and promoting dangerous concentrations of economic and financial power. PWG called on Congress to pass legislation that would require all issuers of stablecoins to be banks that are insured by the Federal Deposit Insurance Corporation (FDIC). PWG also recommended that federal agencies and the Financial Stability Oversight Council should use their “existing authorities” to “address risks associated with payment stablecoin arrangements . . . to the extent possible.”

At present, stablecoins are used mainly to make payments for trades in cryptocurrency markets and to provide collateral for derivatives and lending transactions involving cryptocurrencies. However, technology companies are exploring a much broader range of potential uses for stablecoins. In October 2021, Facebook launched a “pilot” of its Novi “digital currency wallet,” which uses the Pax Dollar stablecoin as its first digital currency and allows customers to make person-to-person payments within and across national borders. The launch of Novi indicates that stablecoins could potentially become a form of “private money” that is widely used in consumer and commercial transactions. PWG’s report calls on federal agencies and Congress to take immediate steps to establish a federal oversight regime that could respond effectively to the dangers created by stablecoins.

This paper strongly supports three regulatory approaches recommended in PWG’s report. First, the Securities and Exchange Commission (SEC) should use its available powers to regulate stablecoins as “securities” and protect investors and securities markets. However, the scope of the SEC’s authority to regulate stablecoins is not clear, and federal securities laws do not provide adequate safeguards to control the systemic threats that stablecoins pose to financial stability and
the payments system.

Second, the Department of Justice (DOJ) should designate stablecoins as “deposits” and should bring enforcement actions to prevent issuers and distributors of stablecoins from unlawfully receiving “deposits” in violation of Section 21(a) of the Glass-Steagall Act. Section 21(a) offers a promising avenue for regulatory action, but its provisions contain uncertainties and gaps and do not provide a complete remedy for the hazards created by stablecoins. The most significant gap in Section 21(a) allows state (and possibly federal) banking authorities to charter special-purpose depository institutions that could issue and distribute stablecoins without obtaining deposit insurance from the FDIC.

Third, Congress should adopt legislation mandating that all issuers and distributors of stablecoins must be FDIC-insured banks. That requirement would compel all stablecoin issuers and distributors and their parent companies to comply with federal laws that protect the safety, soundness, and stability of our banking system and obligate banks to operate in a manner consistent with the public interest. Requiring stablecoin issuers and distributors to be FDIC- insured banks would also maintain the longstanding U.S. policy of separating banking and commerce. It would prevent Facebook and other Big Tech firms from using stablecoin ventures as building blocks for “shadow banking” empires that would erode consumer protections, impair competition, subvert the effectiveness of financial regulation, and potentially unleash systemic crises across our financial and commercial sectors during severe economic downturns and financial disruptions.

AMANDA M. ROSE, Vanderbilt University - Law School
Email: amanda.rose@vanderbilt.edu

Communications in connection with an initial public offering (IPO) are excluded from the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 (PSLRA). Not surprisingly, IPO issuers do not share projections publicly—the liability risk is too great. Communications in connection with a merger, by contrast, are not excluded from the safe harbor, and special purpose acquisition companies (SPACs) routinely share their merger targets’ projections publicly. Does the divergent application of the PSLRA’s safe harbor in traditional IPOs and SPAC mergers create an opportunity for “regulatory arbitrage” and, if so, what should be done about it? This Article offers a framework for evaluating these timely questions, and for evaluating claims of regulatory arbitrage more broadly. The analysis brings into sharp focus the contestable policy choices that undergird the IPO exclusion to the PSLRA’s safe harbor.

SCOTT GUERNSEY, University of Tennessee
Email: sguernsey@utk.edu
SIMONE M. SEPE, University of Arizona - James E. Rogers College of Law, University of Toulouse 1 - Université Toulouse 1 Capitole, Toulouse School of Economics, European Corporate Governance Institute (ECGI), American College of Governance Counsel
Email: sms234@email.arizona.edu
MATTHEW SERFLING, University of Tennessee
Email: mserflin@utk.edu

This internet appendix provides supplemental results as described in our paper "Blood in the Water: The Value of Antitakeover Provisions During Market Shocks", available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3716995

HARSHIT NAVEEN, ICFAI university jaipur
Email: naveenharshit2003@gmail.com

Law cannot be defined in a short definition. Law is the study of various subjects which include all the aspects for the better functioning of a society. It includes the civil, criminal, corporate, family, and every other important component required for the betterment of humanity. Company law refers to the branch of law that deals with the functioning, issues, and crimes related to the corporate sector. It includes all the necessary factors needed for the legal mechanism of corporations and also for securing the rights of members and investors. In India, the legislation that covers all the major components is The Companies Act, 2013. The act has been amended several times to include the present-day necessities of the companies.

It is necessary to refer to commentaries to understand the law in detail. Company law is a vast subject with various theories and principles that are inculcated in the provisions themselves. Bare acts are sufficient for making us understand the black letter law and the explanations, exceptions, and illustrations attached. However, sometimes it is necessary to refer to the commentaries by different legal authors to get the knowledge in depth. The commentary on Company law by Avatar Singh is a well-known book for the said subject. Along with the provisions, it states the relevant case laws, theories, and examples needed. Each section has been explained in such a way that it provides real-life examples which explain the practicality of the working of corporations.

In the article, the author will review the books on various facets. The review will include positive as well as negative insights about the book. Also, the importance of the book in understanding the law that forms the core of corporations. The review will make it clear for the reader that how far the book has contemplated and indulged with the provisions to make it a complete guide.