Libra Whitepaper Gets Updated, Association Members Won’t Get Paid On Reserve Asset Profits
- The new whitepaper doesn’t use interest to pay early investors, which are predominantly involved in the Libra Association.
- The interest will still go towards operational costs, keeping transaction fees low, and further development.
Ever since the Libra Association released their whitepaper for their crypto asset (Libra), there have been many regulators pushing for change. Reports by CoinTelegraph shed light on a recent article by Chris Brummer, a law professor at Georgetown University, discussing the new changes that the whitepaper has gone through. Apart from the amendments that were expected with the new list of members, the Libra whitepaper also removed the dividends that were meant to be paid out to early investors in the project.
The original whitepaper for Libra, published in June 2019, stated that the interest accrued for the reserve assets would be used for multiple purposes, including the coverage of system costs, and supporting growth. One of the other uses for the interest was meant to be used towards paying dividends to Libra Association members as the earliest investors in the project. However, the revision has created the following change:
“Interest on the reserve assets will be used to cover the costs of the system, ensure low transaction fees, and support further growth and adoption.”
Brummer stated that the possible reach for the change is that, by awarding dividends to early investors, there’s the possibility of a conflict of interest with the Libra Association members and the currency’s end-users. The reserve assets need to be stable to promote the update of the Libra token, and paying out dividends would put the reserve at risk with other assets. Trust would be reduced or lost entirely, resulting in a lack of uptake for the asset, since the stablecoins rand to lose their value.
Another potential reason for the changes is to address the worries that Libra and other stablecoins could end up being defined as a security, which is the hope of two lawmakers. Still, Brummer remarked that this new definition won’t likely happen, since stablecoins generally keep the same value.