September 7, 2023 at 11:08 GMTModified date: September 7, 2023 at 16:21 GMT
September 7, 2023 at 11:08 GMT

Palau pauses USD-backed stablecoin pilot

Palau, an island in the western Pacific, is pausing its US dollar stablecoin launch to collect feedback from participants after starting the pilot in July.

Palau pauses USD-backed stablecoin pilot

Palau, an island in the western Pacific, is freezing its US dollar stablecoin launch after starting the pilot in July.

Jay Hunter Anson, digital residency officer director and Palau Ministry of Finance member, announced on X today that the government will curtail the Palau Stablecoin (PSC) tomorrow, 8 September. 

In the post, Anson did not divulge the full reasons for stalling the stablecoin, but added that the government will request a participant survey next week.

Anson revealed: “First, thank you all for being part of Palau’s first Stablecoin Pilot. Whether you completed the process or ultimately decided not to withdraw from the project, we are very thankful for your willingness to explore the possibilities of Palau’s fintech future with us.  

“On Friday we will cease distribution of the Palau Stablecoin.  

“For those with PSC still in their wallets, you will have until 15 September to spend it before it is frozen in perpetuity.  

“After 15 September you will no longer be able to spend the PSC. This will give us time to process retailer redemptions before the Pilot’s official termination at the end of the month.  

“Next week we will send a survey to everyone who participated in the pilot. Please complete the survey as soon as possible. Your feedback is critical to developing our final report to the Palau Congress and the President.  

“If we are authorized to move forward with the next phase of the Stablecoin program, our collective lessons learned will shape the way ahead.”

Also known as the Kluk, Palau Stablecoin is built on Ripple’s XRP Ledger and aims to cut transaction fees and improve transfer speed for the Palau government and island’s population.

The pilot freeze comes mere days after Anson posted a National Institute of Standards and Technology study about stablecoins on 5 September.

He had said: “Stablecoins are a type of cryptocurrency that aim to maintain a stable price relative to a specified asset (usually a fiat currency). Much has been written about how to use stablecoins and about the economic implications of doing so, specifically price variability.

“However, little has been written on the technical mechanisms and architectures used or related security considerations.”