The Public Audit Agency of Palau (OPA) has published a performance audit of the government’s pilot project for an XRP-LEDGER-based Stablecoin, confirming that Ripple Services Inc. supported the initiative with a $25,000 grant. More than half of this amount has been utilized. The 12-page report details the financials of the Palau Stablecoin (PSC) project, which took place from October 26, 2021, to November 27, 2023.
Confirmation of Ripple’s $25,000 Grant in Audit
The audit revealed that Ripple transferred $25,000 to the National Treasury on March 10, 2023, of which $14,035 was allocated to refund 100 volunteers and 154 government employees, including 100 participating merchants. The remaining balance of $10,965 is awaiting decisions regarding a potential second phase and is still in the Treasury.
Ripple’s contributions were accurately recorded under the 2023 Budget Act, with the OPA noting that these funds were properly explained and deposited into the Domestic Treasury.
At the behest of Senator Mark Rudim, an inquiry was initiated by the OPA following concerns raised in July 2023 about the legality and financial oversight of the program. The audit centered on two main questions: whether the Ministry of Finance (MOF) had the legal right to engage with private companies and whether it adhered to the Palauan Act in doing so.
The audit’s findings indicated that the MOF acted within its legal authority, without violating its mission. However, it identified two procedural flaws. Notably, the original memorandum of understanding from October 2021 and the December 2022 Ripple Master Agreement were not certified for form and legality by the Attorney General, which is required by law.
“The Republic of Palau can’t confirm the legality of these agreements as stipulated by law,” stated the OPA. They recommended that the MOF ensure all government contracts are approved by the Attorney General before being put into effect.
The ministry acknowledged this caution but mentioned in its response that agreements that do not bind the Republic are often accepted without an Attorney General review. They emphasized reliance on legal advice from the President’s legal office, arguing that certification was conducted at the time of expenditure, and that the grant was subject to annual external review. “We appreciate the audit results presented,” the MOF communicated to the auditors.
The End of the XRP Ledger Pilot: What’s Next?
Aside from procedural recommendations, the OPA offered insights on the pilot program itself. It noted that the MOF recognized the pilot’s valuable design for exploring technical solutions for the creation, distribution, repayment, and destruction of PSCs. However, the report highlighted concerns, warning that expanding the national currency without proper conduct would be “illegal.”
For Ripple, this audit wrapped up three years of participation, but its financial contribution was relatively moderate when compared to other central bank digital currency initiatives. While the report didn’t assess the technical performance, it confirmed that the XRP ledger successfully managed mint and burn processes, along with retailer reimbursements. For policymakers in Palau, the next step involves deciding whether to create legislation to officially adopt the PSC as currency or to potentially shelve the remaining available grants.
As of now, XRP is trading at $2.1696.
