Surprisingly, Jay Hunter Anson, director of the Office of Digital Residency at the Palau Ministry of Finance, announced the discontinuation of the Ripple-based Palau Stablecoin (PSC) pilot program.this announcement Anson tweeted, “We will stop distributing Palau stablecoins on Friday. For those who still have PSC in their wallets, you have until September 15th to spend it, and then it will be permanently frozen .”
Pilot and its prerequisites
Launched at the end of July 2023, the Palau Stablecoin (PSC) is the result of a collaboration between the Republic of Palau and blockchain-based digital payment protocol Ripple. The stablecoin is issued on the XRP Ledger and backed by U.S. dollars. The pilot program involved Palauan government employees and selected local businessmen, including Surrangel and Sons, The Penthouse Hotel and King’s Minute Mart.
Jay Hunter Anson has previously praised the project’s merits, saying: “This is a prototype digital currency that is being pilot tested and has the potential to revolutionize the way goods and services are paid for in Palau. The stablecoin aims to provide a “free” secure, transparent and convenient payment option that is designed to be more efficient than other online payment services.
The exact reason for the sudden termination of the Palau stablecoin has not been clearly stated. Anson did mention, however, that a survey will be sent to all participants in the pilot program. “Your feedback will be critical as we develop our final report to the Palau Congress and President. If we are empowered to move forward with the next phase of our stablecoin program, our collective lessons learned will shape the way forward,” he said.
Given the feedback requests, it seems reasonable for the Palau stablecoin to wrap up regular testing in about two months. In addition, Anson previously noted that “the pilot project will be evaluated after two months and a decision will be made on whether to expand it further.”
The Palau stablecoin is built on top of Ripple’s CBDC (Central Bank Digital Currency) platform, an end-to-end solution designed for central banks to issue their own digital currencies. The platform allows Palau to manage and customize the entire lifecycle of the stablecoin, from minting to redemption.
What’s next for Palau and Ripple?
While the pilot program is coming to an end, the future of Palau’s PSC remains uncertain. The government has until the end of September to process retailer redemptions, and lessons learned from the pilot could inform future fintech initiatives in the country.
For Ripple, the discontinuation of the Palau stablecoin project could serve as a case study in refining its CBDC platform and strategy for future partnerships with governments and financial institutions around the world.
At press time, XRP is trading at $0.5002.
Featured image via Times Tabloid, chart via TradingView.com
