The Republic of Palau announced that it has partnered with Cryptic Labs to develop a digital residency programme based on the Root Name System of the latter. On December 22, Palau President Surangel S. Whipps, Jr. signed the Digital Residency Act into law.
"One of the things that we, as a country, wanted to do is diversify our economy and create a financial centre hub...As a small country, that's challenging. But when you're moving digitally, that's easy." told President Whipps.
According to Cryptic Labs, global citizens can claim digital residence backed by the Republic of Palau utilising the Root Name System. In other words, they can enjoy some of the benefits of residency in the 18,000-strong island nation without really residing there.
It's a significant plus if you're a crypto user in a country where trading is prohibited. Cryptic Labs, which began operations in Palo Alto in 2018, claims that their blockchain-based technology enables safe ID verification and access to Know Your Customer (KYC) capabilities, required to use numerous platforms.
The president made it clear that the goal isn't to get around anti-money laundering or counter-terrorism rules and that KYC requirements would have to be performed every year to keep residency.
Approved applicants will receive a physical and digital resident ID card, the latter of which will be in the form of a non-fungible token (NFT). Cryptic Labs has yet to reveal which blockchain the protocol would employ. Still, it has been stated that the programme's initial phase will only generate physical IDs, with NFTs following later.
"Hopefully, this digital ID will help also facilitate people to be part of the crypto community." says the president.