By: Bernadette Carreon
The Office of the Public Auditor has determined that a supplemental audit of Palau’s Stablecoin Project (PSC) is no longer necessary, stating that legal matters fall outside its jurisdiction, according to the office’s response to the Senate Committee on Ways and Means and Financial Matters.
The decision comes after Senator Mark Rudimch, Chairman of the Senate Committee on Ways and Means, formally requested in July that the Office of the Public Auditor conduct an additional review of the Palau Stablecoin Pilot Project, citing significant legal compliance concerns and gaps in the initial audit report.
In his letter to Public Auditor Saturnino Tewid, Rudimch argued the original audit failed to examine critical aspects of the project, including proper authorization and budgeting of public resources used during the pilot phase.
However, in the OPA’s response dated August 6, Tewid said that legal matters raised during the original audit fall outside the audit office’s jurisdiction. He indicated that legal concerns need to be addressed through other government channels rather than through the auditing process.
“The other issues raised are legal matters that are outside of our office jurisdiction,” Tewid stated, directing such matters to either the Attorney General’s office or the Special Prosecutor.
The original audit, completed in June 2025, had identified compliance failures within the Ministry of Finance (MOF) regarding required legal approvals for launching the stablecoin program with U.S.-based blockchain company Ripple.
Despite these concerns, Tewid noted that his office found the $25,000 donation from Ripple was properly authorized and appropriated. He added that the Ministry of Finance is permitted to use those funds as they were appropriated in the FY2023 budget, and their use is considered within the MOF’s broad authority.
The digital currency, known as PSC, was developed on Ripple’s XRP Ledger and aimed to enhance financial access and reduce transaction costs for the island nation.
MOF entered into a Memorandum of Understanding (MOU) with Ripple Services Inc. in December 2022, receiving $25,000 in funding for the pilot phase. Of that amount, $14,035 was spent—primarily to reimburse three participating vendors who accepted stablecoins from 154 government volunteers during testing.
The original audit identified key legal lapses. It stated the Ministry failed to obtain certifications from both the Attorney General and the National Director of Program, Budget, and Management.
The audit stated that Palauan law mandates that the Attorney General certify all government agreements and the Director confirm funding availability before state resources are committed. Skipping these steps, the audit report noted, created legal concerns,
The Ministry of Finance defended its actions, citing legal guidance from the Office of the President. It argued that since the agreement with Ripple was an MOU and not a binding contract, it did not require formal certification.
However, the Public Auditor emphasized that all public agreements—regardless of funding source or form—must adhere to procurement and certification laws to protect public resources.
Although the audit did not uncover any misuse of funds or misconduct by officials, it highlighted the need for improved oversight and legal compliance in future technology-driven initiatives.