An announcement conveyed by the government of Palau revealed that the regulatory agencies had been granted legal authority to proceed with the pilot trial for digital currency commonly known as Palau Stablecoin (PSC). The proposed pilot test will involve backing the PSC with the US dollar.
Palau to Conduct Pilot Test for New Stablecoin
In the primary phase of the pilot test, the regulators will issue the PSC coin on the XRP ledger. Soon after listing the PSC on Ripple’s decentralized cryptographic ledger, the market regulators will issue the first coins to government staff.
Before this, the Palauan regulators had tested the use case of the PSC with merchants and other volunteers. In the previous pilot trial for PSC, the regulators tested whether the stablecoin could be used in payments. At that time, the regulators leveraged Ripple’s CBDC platform to examine the effectiveness and reliability of PSC in the payment sector.
In May, the Ripple team announced that its XRP ledger platform had supported leading market players to develop currencies, including central bank digital currency (CBDC) and stablecoin that could be used in international trade. In the announcement, Ripple claimed to incorporate revolutionary technologies on the XRP ledger (XRPL) to enable the user to make fast transactions at a cheaper cost.
Besides the benefits of Ripple’s CBDC platform, the payment company announced plans to work with around 20 countries in developing digital fiat. Ripple claimed that its CBDC platform utilizes lower gas costs than others in conventional finance.
Even though Palau had entered into a partnership agreement before the launch of the Ripple CBDC platform, the payment company pledged to support the country in issuing the new stablecoin.
In 2021 Ripple signed a partnership agreement with Palau to improve financial inclusivity and accessibility to financial tools. Under the partnership agreement, Ripple agreed to support Palau in developing a digital currency pegged to the US dollar to improve cross-border transactions. Also, the payment company vowed to support Palau to become a climate-friendly country.
Challenges Facing Countries on Pacific Island
Being located in the Western Pacific, Palau has been affected by climatic changes. For years the Island country has strived to attain its climatic goals to foster economic development and improve the well-being of the community.
The attempt to improve the social life of the Palauans challenged the government to seek strategic partnerships with influential figures in the tech and crypto sectors. Last year the government of Palau entered into a partnership agreement with Cryptic Labs.
The partnership aimed at supporting Palau to attain global anti-money laundering standards. The partners launched a blockchain-powered residency program, “root name system (RNS), ” to achieve the goal.”
The RNS program will verify identity and ensure Palau meets the international Know-Your-Customers (KYC) requirements. In addition, the RNS will be used to issue Palau national identification in physical or digital form.
Besides Palau’s commendable achievements, other Pacific island countries are seeking to push for mass adoption of crypto. A few months ago, the Marshall Island government legalized using decentralized autonomous organizations (DAOs).
The enforcement of the DAO Act in Marshall Island aimed at supporting the regulators to regulate entities in decentralized finance. Elsewhere, Tonga had announced plans to accept Bitcoin as a legal tender in 2023.
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