KOROR (Island Times/Pacnews) — A plan to pass a Digital Residency Identification law did not succeed as the bill failed to get a majority of the votes in the Palau Senate.
Five senators were in favor of the bill, six were opposed and one abstained which was counted as a “yes” vote under Senate rules.
The bill was rushed through the House of Delegates and the Senate, with the expressed goal of enacting it by Dec. 14, 2021.
The bill was submitted to lawmakers by President Surangel Whipps on Nov. 2, 2021, saying that it would help diversify Palau’s economy.
He urged quick action “as other nations are also jockeying to make a name in this market.”
“Our action to oppose this bill wasn’t about whether we agree or disagree with the President,” stated Sen. Secilil Eldebechel, chair of the Senate Committee on Banking, Insurance and Other Financial Matters.
“It was about deciding whether it was the right thing to do or not,” the senator added. “And from what we’ve seen in our review and analysis of this bill as it is structured, it make some of us feel that having to rush the passage of this bill without sufficient due diligence may not be the right thing to do. The expressed deadline of Dec. 14…was clearly premature and unrealistic for some of us. That is why we didn’t have a choice but to vote against it.”
The bill would allow Palau to issue “digital residency identification” or an electronic Palauan ID to non-Palauans overseas, similar to the idea of the “elite visa” program, without requiring that the person come to Palau.
It gives the bearer of an ID a legal identity as a resident of Palau without actually being a physical resident. The person with the ID will be able to use it to open accounts, trade online, or conduct activities online that require identification.
The second major component of the bill was the establishment of “Cryptocurrency Exchange Licensing.” This would allow Palau to license companies that trade cryptocurrencies and allow people to exchange dollars for cryptocurrencies.
According to the bill, a service provider will work with the Ministry of Finance to administer the digital residency program. Contracting a “service provider” would be exempted from the procurement requirements.
Sen. Steve Kuartei, who abstained from voting on the bill, said he did his homework and he believed that digital residency identification is harmless and can benefit Palau.
“Having a digital residency ID does not exempt them from any immigration or labor laws in Palau. If they come here, they will have to go through the process like everyone else,” he said.
Senator Eldebechelin said: “I want it to be clear that I was not against the concept of a digital residency program. I think that was a good idea to explore as a potential source of revenue for the government. However, the process in which the bill was proposed made it difficult for me to determine whether it will serve the best interest of” Palau.
Recently, a memorandum of agreement was signed between the Palau government and Ripple, a blockchain company based in San Francisco, to explore the creation of a Palau national digital currency.
“Some of us are confusing this digital residency with Ripple and the national digital currency issue,” Senator Kuartei said. “This is not related to Ripple, but to a different company, Cryptic Labs. It just so happens they were here at the same time.”
But Senator Eldebechel said “the fact that Cryptic Labs was a chosen partner to work [on] the digital residency program even before the bill was passed made me feel uneasy with…this whole process.”
Secilil Eldebechel
