On 10 December, the Libra project quietly updated their whitepaper. Some changes are as expected, with the removal of Mastercard and Visa (who left the project immediately after being sent a letter from Congress which itself is extraordinary) but a key sentence has been deleted. The original whitepaper stated:
Interest on the reserve assets will be used to cover the costs of the system, ensure low transaction fees, pay dividends to investors who provided capital to jumpstart the ecosystem (read “The Libra Association here), and support further growth and adoption. The rules for allocating interest on the reserve will be set in advance and will be overseen by the Libra Association. Users of Libra do not receive a return from the reserve.
(emphasis added)
The new whitepaper 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 rules for allocating interest on the reserve will be set in advance and will be overseen by the Libra Association. Users of Libra do not receive a return from the reserve.
A further reference to funding to jumpstart the ecosystem has been removed.
A full comparison of the new and old whitepaper is here.
Some had argued that there would be a perverse incentive for the Libra Association to include riskier assets in the basket backing Libra if they would be receive part of the return, particularly if the assets were purchased with other people's money. It would seem just as likely that the inclusion of such a return would trigger financial licensing requirements in most jurisdictions in relation to the offer of the Investment Tokens (but it also seems likely that Libra intended these to be regulated as securities from the start of the project).
There have been a few other changes to the Libra website as well consistent with this change to the whitepaper - such a change to the whole project may make it harder to finance initially, but also may better align the interests of those in control of the reserve and Libra token holders in the long run.
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