In collaboration with Cryptic Labs, the Republic of Palau has announced the launch of a “digital residency program.” The blockchain-based residency and ID system, dubbed Root Name System (RNS), will give access to future services within Palau’s burgeoning digital economy.
Palau, an island nation, is aiming to diversify its economy by introducing a digital residency program on the blockchain. Root Name System is a program that will act as a foundational digital ID that will be acknowledged by a sovereign nation. Cryptic Labs, a blockchain research center and commercial accelerator is developing RNS.
The president of Palau shared: “From the beginning of our term, what we wanted to do was diversify our economy—make Palau a financial center.” However, his team soon discovered that becoming a financial center required “having a sovereign-backed ID that can be verified.”
In Palau’s digital residency scheme, verified identity is the name of the game. The ability to embed KYC and AML/CFT approvals right into the ID itself, is the key advantage afforded by blockchain-backed digital ID. The President added, “And it’s reissued every year. We want to make sure that the system is as clean as possible.”
The objective is that by incorporating KYC and background checks into the residency application itself, Palauan digital “residents” will be able to “transact commerce and access commercial possibilities in Palau,” with greater agility.
This could even involve the prospect of e-corporations in Palau, assuming the law to allow them passes. The president, Mr. Whipps, is optimistic, as the law is now being debated in the Palau National Congress. The bill has passed the Senate and is now in the House of Delegates, where Mr. Whipps is working to finish the legislation’s phrasing. He expects the bill will be passed in the next several months.
The president continued:
“One of the challenges that we have is, we have a registry process now. It’s time-consuming, and we didn’t have the technology to verify backgrounds or check on things. Now, with this process—first, you vet them through the digital ID processor. Now when they go to [set up] a corporation, it will be much quicker because now they’ve got an ID that we’ve verified. […] This is all about economic freedom. So you know, it’s all about digital nomads roaming around the world. This is just allowing for that opportunity. Why not come be a resident of paradise? Hopefully these digital residents will want to come and visit us. We can welcome the whole world to be in digital residence.”
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