USD-backed stablecoin pilot project launched by Pacific island nation of Palau
The government of Palau is set to begin a pilot project for a United States dollar-backed stablecoin on July 26. The new coin will be issued on XRP Ledger.
The country will release the first Palau Stablecoins (PSCs) in the pilot project to government employees. This comes after several days of testing using volunteers to make purchases with various devices.
The PSC, nicknamed the Kluk, possibly due to its bird logo, is the latest project to run on the Ripple CBDC Platform that debuted in May. Ripple claimed at that time to be in talks with over 20 governments about central bank digital currency (CBDC) issuance. The agreement with Palau predates the new Ripple product, however. Ripple’s partnership with Palau was announced in 2021, with a target launch date in 2022.
Palau is spread across a group of islands in the Oceania region of the Pacific Ocean. It has a population of slightly more than 18,000 and uses the U.S. dollar as its national currency.
Related: Montenegro’s central bank teams up with Ripple on digital currency pilot project
The country already has a digital residency program and issues ID supported by Cryptic Labs that is available as a nonfungible token on the Binance BNB blockchain. Palau’s Root Name System ID is valid for identification and Know Your Customer purposes and is recognized by several major international entities. It costs just over $20 per month.
So far during this limited pilot we have successfully tested PSC with WebApp and Android Wallets (multiple OS versions and smartphone models).
iPhone wallet app is coming soon
✔️Minted by Republic of Palau National Treasury
✔️Distribution by Ministry of Finance
✔️Wallet to… pic.twitter.com/I3Gvt9PV7X— Jay Hunter Anson (@JHX_1138) July 19, 2023
Pacific island nations have been a hotbed of crypto development in recent years. For example, the Republic of the Marshall Islands is launching a CBDC and has legalized decentralized autonomous organizations (DAOs). Vanuatu hosts the Satoshi Island “place for the crypto community to call home.” Tonga announced plans to introduce Bitcoin as legal tender, although it seems to have missed its planned January 2023 launch.
Magazine: Why are crypto fans obsessed with micronations and seasteading?
The lower house of Poland’s parliament failed to secure the required three-fifths majority to override President Karol Nawrocki’s veto of the Crypto-Asset Market Act, pushing the country further away from regulating its digital-asset sector at a moment when lawmakers argue that oversight is increasingly urgent.
As Bloomberg reported Friday, the legislation — advanced by Prime Minister Donald Tusk’s government — was intended to align Poland with the European Union’s MiCA framework for crypto markets. The bill was introduced in June but did not survive the president’s veto.
Nawrocki blocked the measure last week, arguing it would “threaten the freedoms of Poles, their property, and the stability of the state,” as Cointelegraph previously reported.
With the president’s veto upheld, the bill will not move forward, forcing the government to restart its crypto lawmaking process.
The proposal has sharply divided lawmakers and the crypto industry. Supporters framed the bill as a national security priority, saying that comprehensive rules are necessary to curb fraud and prevent potential misuse of crypto assets by foreign actors, including Russia, according to Bloomberg.
However, several crypto-industry groups opposed the legislation, warning that its requirements were overly burdensome and could drive startups out of the country.
Critics pointed to stringent licensing rules, high compliance costs and criminal-liability provisions for service-provider executives, arguing that the bill risked stifling innovation and creating an uncompetitive business environment.
Related: EU plan would boost ESMA powers over crypto and capital markets
Crypto adoption in Poland ramps up amid regulatory pause
Cryptocurrency use in Poland continues to accelerate even as the country stalls on comprehensive regulation. Chainalysis recently identified Poland as one of Europe’s “large crypto economies,” noting that the country’s onchain activity has expanded significantly over the past year.
According to the company’s 2025 Europe Crypto Adoption report, Poland recorded more than 50% year-over-year growth in overall transaction volume.
Polish investors are also increasing their exposure to Bitcoin (BTC), reflected in a surge in Bitcoin ATM installations in recent years. In January, Cointelegraph reported that Poland had become the world’s fifth-largest Bitcoin ATM hub, surpassing even El Salvador — a country that has made Bitcoin a central element of its monetary and financial system.
Magazine: When privacy and AML laws conflict: Crypto projects’ impossible choice
US attorneys representing the federal government have requested that a judge send Terraform Labs co-founder Do Kwon to prison for 12 years at his sentencing hearing next week.
In a Thursday filing in the US District Court for the Southern District of New York, prosecutors asked that a judge sentence Kwon “to a term of twelve years’ imprisonment and finalize the forfeiture of his criminal proceeds.”
The filing came about four months after the Terraform co-founder pleaded guilty to two counts of wire fraud and conspiracy to defraud.
“In just a few years, Kwon caused losses that eclipsed those caused by Samuel Bankman-Fried […] Alexander Mashinsky […] and Karl Sebastian Greenwood [….] combined [emphasis included in filing],” said the Thursday filing. “The Terraform market crash triggered a cascade of crises that swept through cryptocurrency markets and contributed to what has since become known as ‘Crypto Winter.’”
Kwon, who is scheduled to be sentenced on Thursday, was indicted by US authorities in March 2023 for charges including securities fraud, market manipulation, money laundering and wire fraud related to his role at Terraform.
Though his whereabouts were initially unknown after the collapse of Terra in 2022, authorities in Montenegro arrested him on charges unrelated to his role at the company, and he was later extradited to the US.
Related: South Korea targets sub-$680 crypto transfers in sweeping AML crackdown
The price of Terra’s native token, LUNA, surged by more than 40% in the previous 24 hours amid the release of the sentencing recommendation, from about $0.07 to $0.10 at the time of publication. However, the token reached an all-time high price of more than $19.00 before the ecosystem collapsed in May 2022.
Kwon says he could still face prison time in South Korea
In a November court filing, lawyers representing Kwon asked that the Terraform co-founder be given a sentence of no more than five years. His attorneys presented several arguments in favor of a shorter sentence, including that the co-founder could face 40 years in prison in his native South Korea, where prosecutors are also working on a case against him.
“He would not be able to walk out of jail in the United States as a free man for any amount of time: He will be taken from whatever facility in which he serves his sentence directly to an immigration detention center to await a deportation flight to Seoul, where he will immediately reenter pretrial detention pending his criminal charges in South Korea,” said Kwon’s lawyers.
Although Kwon’s and prosecutors’ respective recommendations will remain under consideration, the judge overseeing the sentencing hearing has the authority to sentence the Terraform co-founder to decades in prison, or a significantly shorter time. In contrast, former FTX CEO Sam Bankman-Fried is serving a 25-year sentence after his conviction on seven felony charges, former Celsius CEO Alex Mashinsky was sentenced to 12 years in prison, and a judge sent Karl Sebastian Greenwood to prison for 20 years for his role in the OneCoin scheme.
Magazine: When privacy and AML laws conflict: Crypto projects’ impossible choice
Deputy Prime Minister David Lammy has suggested it could be beneficial for the UK to consider re-entering a customs union with the EU.
He said that although doing so was not the government’s current policy, he could see how other countries outside the EU had benefited from such arrangements.
“It’s self-evident that leaving the European Union badly damaged our economy, took us out of an important marketplace and created serious friction, that untruths were being peddled by those that thought exiting the EU would be a good thing,” Mr Lammy told the News Agents podcast.
“And it’s why every single day that I was foreign secretary, I returned to the subject of our relationship with the European Union.”
Asked repeatedly if he would like to see the UK in a customs union, he said: “That is not currently our policy. That’s not currently where we are.
“But you can see countries like Turkey with a customs union seemingly benefiting and seeing growth in their economy, and again, that’s self-evident.”
David Lammy meets with Turkish Foreign Minister Hakan Fidan in Ankara earlier this year, when he was foreign secretary. Pic: Turkish Foreign Ministry/Reuters
The Prime Minister’s economic adviser Minouche Shafik has also reportedly advocated behind the scenes for joining a customs union.
Mr Lammy’s comments were being taken as the clearest indication yet that the government is considering bringing the UK further back in line with the European Union.
But when Sir Keir Starmer was asked to respond and say why he was not advocating for membership given that growth is an ongoing priority for his government, he was quick to dampen down the speculation.
The prime minister said Labour would be sticking to its manifesto, which pledged to deepen ties with the EU without returning to the customs union, single market or freedom of movement.
“Well, the position that we are taking has been clearly set out in the manifesto, and then we’ve been following it,” Sir Keir said. “And earlier this year, we had the first UK-EU summit ever, and we had 10 strands for a closer relationship.
“So we’ve totally reset relations with the EU.
“That’s good for our economy, good for defence and security, good for the work that we need to do on energy.
Earlier a spokesperson for Number 10 said: “We are strengthening relations with the EU whilst sticking to our red lines.”
“The prime minister reiterated that on Monday evening at the Lady Mayor’s Banquet.”
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Starmer condemns ‘utterly reckless’ Brexit template
Sir Keir set out his foreign policy vision at the banquet, as is tradition.
He said the Brexit vote was a “fair, democratic expression” but the way it was “sold and delivered was wrong”.
“There’s no credible economic vision for Britain not positioning us as an open trading economy,” the Number 10 spokesman said.
“We have to be grown up about trade-offs. We have redefined bonds with EU and stuck to our red lines.”
On Mr Lammy’s comments, the spokesman added: “That is not our current policy or where we are.”
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