President Surangel Whipps Jr. Wednesday signed into law the proposed bill that will allow non-citizens to be digital residents of Palau.
Under the new law, a non-citizen, without having to be a physical resident, can apply for a digital residency ID which will allow the bearer to open digital accounts, apply for a certificate of legal name change, establish a physical mailing address, establish a digital phone number.
The digital residency ID is not equivalent to allowing digital residents to establish a business in Palau.
The new law wants to replicate the e-residency system of Estonia, where a digital citizen can sign documents, form companies, access online banking, and conduct online trading, among others.
However, the digital residency ID does not entitle the bearer to reside in Palau nor obtain a driver’s license.
“Digital residence shall have no relevance in the evaluation of an individual’s application as a foreign worker or application for a bank account with a financial institution in the Republic of Palau, or application for foreign investment,” the law stated,
The law also provides for selecting a service provider to administer the Digital Residency Program.
President Whipps said the new law “offers a potential diversification of our economy which is urgently needed in light of the pandemic’s effects on tourism industry.”
Whipps told reporters in a press conference that the initiative could bring in revenues for the country, with Palau becoming the “first mover.”
“Being a first-mover provides us the advantage that people will know that it’s available, and we can tap into those markets that are out there that may need this service. So there are countries that may be the digital exchange won’t be available in their countries,” Whipps told reporters.
Although it was not clear which countries the president was referring to, the new law came on the heels of the plans of China to shut down cryptocurrency trading in all its forms by Dec. 31.
“So having a digital residency in another country allows them to continue to be able to exchange so that’s real opportunity that’s there. And some of those countries have said that by the end of this year, they will have to stop so, that’s the opportunity,” the president added.
Under the law, a fee of $50 dollars will be collected as a fee for an ID application, and once approved, the applicant will have to pay $100 for the ID.
The Digital Residency bill was defeated in the Senate earlier this month and this week Senate recalled it, removed references to digital currency exchange and passed it in a 10-3 votes.