Self-Custodial BAT (Still) Coming to Brave Browser
On January 13, 2023, Brave announced big changes to the Brave Rewards program. If users wanted to accrue BAT, they would need to connect their rewards profile to a custodial account. Depending on where they live, it is either Uphold, Gemini, bitFlayer, or ZebPay. Additionally, Brave began sunsetting vBAT of which the deadline is this October 31. Basically any accrued vBAT will no longer exist unless users connect to a custodial account. And then there are those individuals who live in unsupported regions who will be left in the dust.
In the January 2023 update, Brave did state its plans to decentralize the vBAT system, allowing for self-custody BAT, on-chain tips, and purchase of Brave services with BAT. Of course, the biggest challenge with this new system would be financial regulations. LBRY Inc. vs. the SEC is one such cautionary tale even though the former did not act nefariously. Since then, there has not been any updates regarding decentralizing vBAT and it seemed that such plans will quietly be forgotten.
However, on the weekly discussion thread on r/BATProject, a user asked the team how Brave is holding up in the current economy. Product Manager u/bat-chriscat confirmed in his post that Brave is working on self-custodial Brave Rewards as well as on-chain tips to creators and a revamp of the Brave Creators system. Another user asked if any wallet could be used for self-custody to which u/bat-chriscat affirmed. He did not state when the system will be launched, so my guess is it won't be until sometime in 1H 2024.
The fact that self-custodial BAT will be a thing is great news. The biggest gripe with the custodial wallets is KYC. Considering how Brave's philosophy hugely emphasizes privacy, KYC is antithetical to that and to accrue BAT in a custodial wallet is sheer irony. On top of that, transferring those tokens to a self-custodial address comes with fees. By cutting out the middle man, users will not have to deal with such inconveniences.
Of course, while this sounds all good, several questions remain. How will Brave implement this system without incurring regulatory wrath? LBRY Inc. incurred a lot of debts from its legal battles and while Brave may have larger coffers, it is not immune to such a fate. Which regions will be supported and which will not? What are the tax implications if users are to accrue BAT in self-custodial wallets? Hopefully, Brave will keep everyone posted and share more details as the launch date draws closer.
