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Palau Audit Finds Legal Gaps in Ripple-Backed Stablecoin Pilot Project
A recent audit has uncovered legal gaps in the Palau government’s pilot project to test a US dollar-backed stablecoin, built on the XRP Ledger and supported by a $25,000 grant from Ripple Services Inc. Although the project operated within the Ministry of Finance’s legal authority, it bypassed two crucial legal procedures required by national law.
The audit, conducted by the Office of the Public Auditor, found that neither the Attorney General nor the National Director of Program, Budget, and Management had certified the agreements as mandated. Furthermore, the initial agreement lacked certification confirming available funds, which is necessary to ensure lawful execution of contracts and protect public resources.
Despite operating within its general authority, the Ministry of Finance relied on internal legal staff from the Office of the President for oversight, citing guidance. However, the Auditor emphasized that government contracts must follow procurement laws regardless of funding source.
No misuse of funds or procedural conflict by staff was reported during the pilot phase, with expenditures properly recorded and accounted for. Although the administration stayed within expected duties, the Auditor’s report made clear that establishing a circulating stablecoin would require formal legislation.
Source: blockonomi.com
