The Office of the Public Auditor of the Republic of Palau conducted an audit of the on-chain Stablecoin pilot project on the XRP Ledger. The 12-page report indicates that the Ministry of Finance has not fully complied with the necessary legal procedures before launching the Palau Stablecoin (PSC).
The audit took place more than two years after the Pacific island nation partnered with Ripple to develop the Stablecoin program, aimed at promoting financial inclusion and reducing transaction costs. With the use of the US dollar as the national currency, PSC is simply a stablecoin pegged to the USD, and the pilot phase included three local retail businesses along with 154 volunteer civil servants conducting transactions.
According to the report, the Ministry of Finance did not fully meet the necessary approvals to proceed with the collaboration. Certifications from the Program Director, Budget and Management, as well as the Legal Advisor were not executed.
According to the law in Palau, the Legal Advisor must certify any agreements, while the Director is responsible for confirming funding before using public funds for a public project.
However, the Ministry of Finance did not adhere to these principles in the Stablecoin pilot program. Although auditors regarded this as a warning sign, they found no evidence of misallocation of resources.
Notably, the report states that Ripple funded the pilot phase of the PSC with $25,000, which was received by the national treasury. Of this, $14,035 was spent on the project, mostly to acquire experimental stablecoins from three providers.
What will be the future of PSC?
Although the audit found no evidence of misappropriation during the pilot phase and the Ministry of Finance operated within its functions, the recommending office needs to strictly adhere to legal certifications in future projects.
The ministry defends its position, stating that it acted based on legal advice from the President's Office and did not seek certification from the Legal Advisor since the agreement with Ripple was merely a Memorandum of Understanding (MOU), which is not binding on the nation.
However, whether the PSC can be implemented on a large scale remains a big question. Any step that makes stablecoins a mainstream currency will require the Palau Congress to enact relevant laws.
The report states:
Any subsequent steps to establish a circulating currency will require legislative approval. Without the laws of Olbiil Era Kelulau, this expansion would be illegal.
Due to the report on phase 2a of the Pilot project being released nearly a year ago, in July 2024, it is currently unclear how this country will continue its journey.
Ripple makes a breakthrough at Apex 2025
The audit indicates that Ripple has promoted the development of stablecoins on XRPL, which has seen significant growth. XRPL records five major stablecoins including Circle USDC, Ripple RLUSD, Braza Group USDB, XSGD pegged to the Singapore USD, and EURØP pegged to the Euro.
The latest report from Ripple notes explosive growth in the network, culminating in major announcements at the Apex 2025 conference for the XRPL community. The event marks a turning point in the application of XRPL on an organizational scale, with the growth of stablecoins and the tokenization of real-world assets (RWA).
For instance, Ondo has issued US Treasury bond tokens (OUSG) for eligible investors on XRPL. Guggenheim Treasury Services has also launched digital commercial paper on XRPL, in collaboration with Zeconomy.
In addition, enterprise-level products aimed at institutional investors will soon appear on XRP, featuring new functionalities such as rights validation, permissioned domains, and multi-purpose tokens, expected to be launched in the coming months.
Source: https://tintucbitcoin.com/ripple-rot-25k-usd-giup-palau/
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