Palau Takes the Lead: Groundbreaking Audit of XRP Ledger Stablecoin Pilot Shakes Up Crypto

Forget CBDCs—Palau just dropped the mic on sovereign crypto experiments.

The Pacific island nation completed its first formal audit of the XRP Ledger-based stablecoin pilot, putting Wall Street's 'blockchain research' to shame. No vague whitepapers here—just a sovereign nation shipping real-world DeFi infrastructure.

Key takeaways:

- First-mover advantage: While G20 nations debate regulatory sandboxes, Palau's treasury already transacts in ledger-native digital dollars

- XRP Ledger flex: The audit confirms the network's capacity for compliant, government-grade settlements (take that, SWIFT)

- Transparency play: Full disclosure of reserve mechanisms—a not-so-subtle jab at opaque 'algorithmic' stablecoins

One hedge fund PM we spoke to muttered: 'They'll IPO the entire country as an SEC-registered DAO by 2026.' He wasn't joking.

What is next for PSC?

Although the auditor did not identify any misappropriation in the pilot phase of the stablecoin and acknowledged that the Ministry of Finance acted within its mandate, it called for necessary certifications in future projects.

However, the Ministry defended its position, noting that it acted in line with legal advice from the Office of the President and did not get the Attorney General’s certification because the agreement with Ripple was a Memorandum of Understanding (MOU), which did not bind the country.

Nevertheless, whether the PSC will proceed beyond the pilot phase is unclear. This is because any subsequent step that WOULD make the stablecoin become a widely accepted currency will require the legislature to pass a law on the issue.

The report said:

“Any further steps toward establishing a circulating currency would require legislative approval. Without the enactment of a law by the Olbiil Era Kelulau, such an expansion would be unlawful.”

Given that the last report on the Pilot for the Phase 2a was released almost a year ago, in July 2024, there is no clarity on what is next for the country.

Ripple celebrates landmark developments from Apex 2025

While the audit highlights how Ripple encouraged the development of stablecoins on the XRPL, the network appears to have seen sufficient development. XRPL has sizable stablecoin adoption with five stablecoins, including the Circle USDC, Ripple RLUSD, Braza Group USDB, Singapore Dollar-pegged XSGD, and Euro-pegged EURØP, all on the network.

A recent report from Ripple highlighted the network’s recent growth, culminating in major announcements at the Apex 2025 conference for the XRPL community. It noted that the event marked the turnaround for XRPL in its institutional adoption efforts, with stablecoins and real-world assets (RWA) tokenization growing on the network.

For instance, the ONDO tokenized US treasuries (OUSG) are now available for qualified investors on XRPL, while Guggenheim  Treasury Services launched a digital commercial paper on XRPL in partnership with Zeconomy.

However, more enterprise-grade products for institutional investors might soon be coming to XRP with new features such as credentials, permitted domains, and multipurpose tokens, which are set to become available in the coming months.

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