Flare Network’s expected airdrop for XRP hodlers may not go as planned

Flare Network’s highly anticipated airdrop for XRP holders is about to launch at a pivotal moment.

Flare, which plans to distribute billions of Spark tokens to XRP holders, has announced it will be reviewing the airdrop for tax reasons.

Flare’s original plan was to send eligible XRP holders 15% of the claimable Spark all at once and the remaining tokens monthly and complete the distribution in a minimum of 25 months and up to 34 months.

In a statement via a blog post, Flare said longer-term payouts could become a major tax problem.

“There is particular concern that the Spark token, since it becomes valuable after the mainnet launches – which equates to a long-term distribution of 3% per month without the initial 15% – could be considered taxable imports.”

In response to the tax implications, Flare Networks decided provided gives XRP owners two options. The first option, called “Buy over Burn”, continues with the original plan of giving each Eligible User 15% of their Eligible Sparks and then distributing the remaining 85% at a monthly rate of 3%. This route also gives users the option to burn some of their tokens to buy the rest of the distribution.

The second option, called the “Pause for Distribution”, is to give the XRP holders their first 15% airdrop and then burn any remaining tokens, essentially giving users 100% of the supply after the first airdrop.

Flare plans to subject the two options to a governance vote and include a draft with the startup’s own views and research.

“Full governance proposals for these alternatives will be worked out, including our views on the pros and cons, and will be published along with the legal memorandum on which Alternative 1 will be based. Options 1 and 2 are based on a majority of the motions with> 66% of the votes for adoption. Option 3 (keeping the original plan), as this is the default, relies on a> 50% majority to agree. “

Annie

According to Dailyhodl

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