Following the pilot of its USD-backed stablecoin built on XRP Ledger, western Pacific Ocean nation Palau plans to halt the initiative on Sept. 15 as the government seeks to collect user feedback.
Jay Hunter, a Palau Ministry of Finance member and director of the digital residency program, announced on X (previously Twitter) that the government will cease distributing Palau Stablecoin (PSC) on September 8.
Following the distribution suspension, the Palau Stablecoin will be frozen on September 15, Hunter said, rendering it unspendable by users.
“After Sept. 15 you will no longer be able to spend the PSC. This will give us time to process retailer redemptions before the pilot’s official termination at the end of the month.”
In the announcement, Hunter didn’t provide precise reasons for freezing the stablecoin, only noting that the government will send a survey to pilot participants next week. The action occurred weeks after the government introduced the PSC at the end of July.
“If we are granted permission to move forward with the next phase of the stablecoin program, our collective experiences will shape the way forward,” the official said. He added that user feedback would be essential in drafting the final report for the Palau Congress and the president.
The news comes shortly after Hunter published a National Institute of Standards and Technology study on stablecoin technology and related security considerations. The September report evaluated some of the required security and stability properties and identified “18 potential issues in stablecoin implementations.”
The Palau Stablecoin, also known as the Kluk, aims to reduce transaction costs and increase the rapidity of transfers for citizens, merchants, and the government of Palau. Ripple’s XRP Ledger, a platform concentrated on issuing central bank digital currencies (CBDC), served as the foundation for the stablecoin.
The XRP ledger CBDC platform is also the basis for similar pilot initiatives in Hong Kong, Bhutan, Colombia, and Montenegro.
