President Surangel Whipps Jr. urged Palau Congress to consider the introduction of a digital residency bill, a bill that will create digital residency and appeals “to individuals and businesses that use cryptocurrency to transact.”
In his letter to the members of the Olbiil Era Kelulau (OEK), the Digital Residency Bill “is a way for businesses to use Palau’s physical location, to transact business digitally.”
Under the bill, Palau will offer a government-issued digital residency to non-resident citizens but it does not give residency physically to foreigners, President Whipps stressed.
According to the president, the bill will also seek potential businesses and individuals that use cryptocurrency to transact. “Palau does not currently have the capacity to start a technologically complex platform for digital residency, but the attached bill sets out a mechanism for swift action through a public-private partnership,” the president added.
The bill allows the government to contract “Private Partner” through an “Operating Agreement” to handle “ancillary services” such as issuing Certificate of Legal Name Change” among others. Private Partner will be exempted from national government taxes and fees but employees of the Private Partner are not exempted.
In the bill, Digital banks, Digital Securities Brokers, or Digital Securities Dealers, referred to as “Digital Institutions” may be chartered under the “operating agreement” and will be exempted from many of the requirements of the Financial Institutions Act. Should FIC finds that any sections of the law or regulations are opposite of this bill, it will create new regulations to exempt “Digital Institutions” from them.
Meanwhile, Resolution 01-2019-03 Moratorium, issued by Palau’s Financial Institutions Commission in 2019 placing a moratorium on applicants wishing to engage in financial activities involving virtual assets and/or cryptocurrencies citing risks to financial institutions has not been rescinded. The resolution stated that such policy shall remain in force until a suitable legal framework is in place to supervise and regulate all transactions involving crypto-asset and/or crypto-currency.
Whipps assured that the bill will ensure that Palau will comply with anti-money laundering protocols and weed out “unscrupulous users.”
He said the bill will enable Palau to diversify its economy and partner with proven private entry to manage the country’s digital platforms.
The president also urged the lawmakers to act swiftly on the bill as other nations are also offering the same legislation.
The bill stated that the system is similar to the Estonian system. Estonia is the first country to offer e-Residency and has been dubbed as one of the most innovative initiatives. (B. Carreon)