The white paper for Facebook-led Libra currency has been discreetly updated, as indicated by a December 10 article written by Georgetown University law professor, Chris Brummer. Beside expected alterations reflecting the modified Libra Association members, the greatest change is the removal of dividends payable to those early investors.
While the original Libra white paper released in June indicated that interest on the reserve assets would be utilized to take care of system costs, keep transaction costs low, support development, and pay dividends to the early investors such as Libra Association members, an indication of dividends has now been removed, so it currently reads:
“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.”
The issue with granting dividends, and possibly the purpose behind the change as indicated by Brummer, is that it made a possible conflict of interest between Libra Association members, and end-users of the digital currency.
To empower the uptake of Libra, the reserve assets with which they are backed must be stable. In any case, if dividends are paid from the interest on these assets, this gives a motivation to load the reserve with higher-risk assets.
This would then decrease trust in and uptake of Libra, in light of the fact that the proposed stablecoins could lose their worth.
There is also the likelihood that the changes are somehow tending to worries that Libra might be classified a security.
Last month, two lawmakers in the United States wanted Libra and other managed stablecoins to be characterized as securities. In any case, Brummer trusts this is an unlikely result, because of the very nature of stablecoins not growing in value.