Chris Brummer, a Professor At the Georgetown University school of law, published an article in which he reports on changes in the technical document on the Libra project from Facebook, including the lack of dividends for investors.
According to the Professor, rereading the Libra document, he noticed a number of changes in it and decided to compare it with the original version published in June. Naturally, amendments were made to the Libra Association members after the departure of five key partners, including Visa and Mastercard.
A significant change that the Professor found was the lack of dividends paid to investors who invested in the project to launch the ecosystem. Now the Libra document States that interest on reserve assets will only be used to cover costs in the system, ensure low transaction fees and further development, without mentioning dividends.
Professor Brammer suggests that Libra could have made such changes, hoping that regulators would stop considering its coins securities. According to the Howie test, if the purchase of a financial product is made without the purpose of making a profit, this financial product cannot be called a security. Accordingly, by deleting information about dividends, the Libra project decided to exclude the profit factor and protect itself from claims from regulators.
At the same time, the law Professor believes that removing any references to receiving dividends is unlikely to affect the legal status of Libra coins – if they are stablecoins and their value will not grow, these coins simply cannot be securities.
Chris Brammer is inclined to believe that the reason for the changes in the technical document could be a conflict of interest between Libra Association members who rely on Libra investment tokens and retail buyers of Libra coins.
To encourage the adoption of Libra, the reserve assets that provide coins must be stable. But if the dividends are paid out of interest on these assets, the project can use a reserve with high-risk assets, which in turn will reduce the credibility of Libra, because the so-called stable coins can lose their value.
Recall that the Libra project was criticized by South Korea and India, and in October, the US Treasury Department said that it will continue to investigate the risks associated with the Libra cryptocurrency project.