Libra Whitepaper Gets Updated, Association Members Won't Get Paid On Reserve Asset Profits

The launch of the Libra stablecoin has been controversial, to put it delicately. Regulators around the world have already called for changes, and it seems that the association has responded with many changes. However, there’s one change that some investors may not be happy about, the loss of dividends paid to the earliest supporters of the asset.

  • 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.

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Krystle M
Krystle is an American cryptocurrency blogger that wants to see the future of crypto and blockchain technology evolve. She has been writing about cryptocurrency for about a year, with a special interest in blockchain technology and regulatory measures around the world. While away from writing and learning about the changes in the cryptocurrency industry, she likes to indulge in science fiction novels and further her experience in playing both guitar and piano.

[Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

[Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer

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