KOROR, Palau — Senator Mark Rudimch is calling on the Office of the Public Auditor to conduct a supplemental audit of the Palau Stablecoin Pilot Project, citing serious concerns over legal compliance, use of government resources, and what he describes as a lack of accountability in the initial audit report.
In a formal letter to Public Auditor Saturnino Tewid, Rudimch—Chairman of the Senate Committee on Ways and Means and Financial Matters—argued that the initial audit failed to fully examine key aspects of the project, including the authorization and budgeting of public resources used during the pilot.
“While your report provides preliminary observations regarding the $25,000 private grant used during the pilot, several significant issues remain unaddressed,” Rudimch wrote. He pointed to potential violations of constitutional, financial, and security laws, and emphasized that the involvement of government staff and infrastructure should have been subject to appropriate legal and budgetary approvals.
The Palau Stablecoin Project was launched in collaboration between the Ministry of Finance and U.S.-based blockchain company Ripple. The audit report indicated that nine government employees and three legal advisors helped administer the project, with another 154 government personnel participating during the pilot phase. However, Rudimch said the audit did not assess the monetary value of government time or resources used in the project, nor did it verify whether their participation was formally authorized.
He also highlighted the absence of certifications from the Attorney General and the National Director of Budget and Management, which are required by law before executing agreements or expending public funds. According to Rudimch, the lack of such approvals could mean that the project was unauthorized from the beginning.
“Regardless of the size of the grant or the informal nature of the agreement, such arrangements cannot override statutory requirements,” he wrote. “If no legal certification or budgetary appropriation occurred, then all resulting government actions may have been unauthorized from the outset.”
Rudimch also questioned who within the Ministry of Finance approved the implementation of the project and whether it underwent any internal or Cabinet-level legal review. He noted the audit report lacked any analysis on whether sensitive government data or communications were shared with Ripple or other third parties—an omission he called “concerning,” particularly given the project’s financial and digital nature.
He criticized the Ministry’s defense that the project was based on a non-binding Memorandum of Understanding (MOU), calling the explanation contradictory. “The claim that the agreement was ‘non-binding’ is contradicted by the fact that it triggered public action and resource deployment,” he wrote, calling for a legal analysis of the MOU’s substance, not just its stated form.
At the core of his concerns is the precedent such projects might set—where government ministries bypass legal safeguards by entering informal agreements, especially when backed by external grants. Rudimch warned that such practices threaten public accountability and legislative oversight.
“The goal is not simply to evaluate this single pilot project, but to reinforce the foundational principle that all government activities must operate within the bounds of the law,” he stated.
In a follow-up letter acknowledging a phone call from Auditor Tewid, Rudimch further clarified the scope of his request. He reiterated that he is not seeking a legal opinion from the Auditor’s office regarding the Senate’s own legal analysis, nor is he asking for a technical review of the cryptocurrency’s underlying digital code.
“To clarify, I am officially asking your office to ‘ensure the efficient and effective administration of public resources’ according to the rules and regulations of the Republic,” he wrote.
“Rather,” he continued, “I am requesting that your office immediately conduct an audit on the attempt to create an alternative monetary system in the Republic of Palau, especially within the government and the use of government offices and resources as test subjects.”
The senator’s questions may signal the possible end of the Palau Stablecoin Project, which has been noted as requiring legislative authorization in order to continue.