Pacific Island Group of Palau Starts Stablecoin Trial on XRP Ledger

The country has been distributing PSC (Palau stablecoin) for three weeks and the test will run through August.

AccessTimeIconJul 26, 2023 at 3:37 p.m. UTC
Updated Jul 28, 2023 at 3:23 p.m. UTC

Palau, a country comprising some 340 islands in the Pacific Ocean, is running a trial of a stablecoin linked to the U.S. dollar, Jay Hunter Anson, a member of the board of directors at the Ministry of Finance, told CoinDesk in a direct message.

The project started in March with wallet design. The first stablecoin was minted in July and the test will run through August, Anson said. The stablecoin will run on the XRP ledger. Ripple, which contributes to the ledger, has been providing technical assistance and personnel, and Palau will also be leveraging Ripple's CBDC platform, a company press release said. In 2021, the country said it would work with Ripple to develop strategies for a digital currency.

"We’ve been distributing PSC (Palau Stablecoin) for three weeks. Today is our first official press release," Anson said in the tweet. A further announcement is due on Thursday.

There's no guarantee the nation of 20,000 people, which does not have a central bank and uses the U.S. dollar as its currency, will continue with the project once the test is over.

"We will send a report to the president and congress with recommendations whether or not the stablecoin is a good program for Palau," Anson told CoinDesk. "Next steps after that will depend on what the government authorities authorize."

The country has also partnered with blockchain research firm Cryptic Labs to launch what it said is the world’s first digital residency program, and once people apply for this they will get a non-fungible token (NFT) representing their resident ID cards that gives them access to Palau-based perks like shipping services and a physical address. It is also working on establishing a crypto exchange, Palau President Surangel S. Whipps, Jr. told CoinDesk in a January interview.

Other Pacific nations have also been diving into crypto technology. Last year, Tonga said it wants to make bitcoin legal tender in the country. And back in 2018, the Republic of the Marshall Islands said it planned on issuing its own digital currency.

CORRECT (July 26 08:22 UTC): Corrects paragraph two to say Ripple contributes to the XRP ledger; adds that Palau will be leveraging Ripple's CBDC platform.

Edited by Sheldon Reback.


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Camomile Shumba

Camomile Shumba is a CoinDesk regulatory reporter based in the UK. She previously worked as an intern for Business Insider and Bloomberg News. She does not currently hold value in any digital currencies or projects.