Palau may be a small island country and microstate in the western Pacific, but it’s doing big things in digitalization. It was one of the first countries to introduce a digital residency program (DRP) with the main objective of allowing non-residents to own and manage their offshore companies remotely.
Furthermore, its bids to become a global crypto hub demonstrate how Palau is keeping up with changing times, which other countries could emulate. With a population of only 18,024 people placed around 265 islands, this small yet pioneer nation is surely leading the way when it comes to digitalization!
In this article, we dive deeper into what are the plans of Palau for its digital future.
Why is Palau exploring blockchain and its possibilities?
Let’s start from the beginning. Palau is an archipelago of more than 500 islands located in the western Pacific Ocean. This place is a tropical island with stunning natural beauty, featuring lush jungles, crystal-clear waters teeming with marine life, and white-sand beaches along its coastlines. With its unique biodiversity and incredible coral reefs the country has become increasingly popular with travelers seeking a tranquil escape from urban life or wanting to explore nature at its finest.
President Surangel S. Whipps Jr. is leading the way in establishing economic resilience and long-term sustainability in the nation of Palau. He understands how important it is to diversify the economy away from reliance on tourism ( over 50% of their GDP), and is working to improve both the financial and corporate sectors to attract more investors through digital residency programs and digital corporate registry.
In this way, the small country will attract digital nomads who work remotely while living a nomadic lifestyle. Additionally, with a digital corporate registry, the county aims to become an entrepreneur center and grow its digital space while creating opportunities for people. Following similar steps to Estonia, Palau hopes to improve the economy without having to follow the Singapore model which brings millions of people to a small nation.
Palau and its digital programs
With Web3 technology now being adopted in Palau, the digital ID program is helping transform this paradise into an innovative hub for sustainability initiatives that will protect the environment for future generations.
The country already launched its digital residency program called Root Name System. It serves as a foundational digital ID recognized by a sovereign nation. The program includes a blockchain-based ID with KYC and AML/CFT verifications required upon application – similar to what banks use to background check people to allow them to open up bank accounts.
Now foreigners from all around the world could buy an e-residency card which in turn allows them to start companies and sign documents, among other things.
“For the first time in history, anyone in the world can participate in fundamental business and economic activities through Palau’s digital residency program,”
– president Surangel Whipps thinks.
The program features both plastic ID and ID on chain. It also uses multiple chains not only Ethereum. Even though it is very new, Palau ID can be used to get verified on sites like Airbnb, and hotels and brings additional benefits and discounts. The president heralded the corporate registry system as an important advancement and a key step in progress.
Palau enters the stablecoin game
With the increased focus at hand from central banks around the world looking to introduce their own CBDCs, Palau has had its eyes on stablecoins for some time. To meet this goal, the National Development Bank of Palau partnered with Ripple Labs last year to work towards a digital stablecoin solution. The main objective of this project is to establish a USD-backed cryptocurrency that would allow them to have a semi-digitalized form of currency. With the boost they need now provided by their partnership with Ripple Labs, Palau hopes that the project will launch in the coming months.
By embracing Web3 technology like digital IDs and stablecoins, Palau marks a crucial point in cryptocurrency development as these tools provide an accessible gateway into other Web3 technologies such as smart contracts, decentralized finance (DeFi), and tokenized properties. We at Propy are strongly believing that tokenizing real-world assets will unlock liquidity, enable global access to the real estate market, and revolutionize the way we do business. Through Web3 technology, not only is Palau unlocking new economic opportunities but it is also streamlining existing processes while enabling its citizens with greater autonomy over their financial lives.