By Sabrina Toppa
In January, Palau launched the world's first digital residency program using blockchain, underscoring its desire to create a new borderless financial hub relying on crypto and blockchain technology.
Through a partnership with Palo Alto-based blockchain developers Cryptic Labs, Palau is launching the Root Name System (RNS), a digital residency program open to anyone in the world.
Calling itself a "gateway to the borderless financial world," the program gives approved users digital resident ID cards in the form of non-fungible tokens, allowing them to receive benefits in Palau's new digital-first economy, which will offer services like physical addresses and shipping.
President Surangel Whipps Jr. sees the creation of the digital ID as one approach to diversify Palau’s tourism and fishing-driven economy, which was battered during the pandemic.
The digital residency costs $248 per person, and the ID features important verification features like know-your-customer, anti-money laundering and anti-terrorism financing verification processes. It would be re-issued each year.
“Our digital residency program will have capacity for internationally recognized standards of identity verification to ensure that Palau upholds the rule of law and our reputational integrity,” said Whipps, who is hoping the program will help the small island nation adopt a digital-first mindset like Singapore or El Salvador. “We welcome all global citizens to apply to participate in Palau’s digital residency program.”
The program currently has a waitlist of more than 60,000 people, with applicants allowed to move 100 spots on the waitlist through referrals.
This is the second leap into blockchain for Palau.
In November, the country partnered with Ripple to create a USD-backed digital currency to facilitate cross-border remittances in an environmentally-friendly manner. Ripple says its carbon-neutral blockchain network is 120,000 times more energy-efficient than others and offers lower costs and faster speeds.
Cryptic Labs has not disclosed the blockchain protocol behind the digital residency program.
Palau is currently exploring setting up the blockchain and cryptocurrency infrastructure to support the digital residency, including developing a stablecoin, establishing crypto exchanges, and creating a corporate registry for blockchain and crypto companies.
Initially skeptical of crypto, the island nation of Palau previously rejected crypto due to its association with illicit finance linked to drugs and terrorism. However, it has recently trumpeted the economic advantages of blockchain and crypto, claiming it is part of the country's new economic vision that will help Palau move out of the pandemic and diversify its economy.
Palau was spared the brunt of the pandemic in the early phase and only logged its first case of Covid-19 last August. (TheStreet Crypto)