Tether Gold

Tether Gold (XAUt): Institutional Explainer

Tether Gold (XAUt) trades at approximately $4,825 per token as of late January 2026, with a market capitalization exceeding $2.1 billion. The token's circulating supply stands at roughly 440,000 XAUt, each representing direct ownership of one troy fine ounce of physical gold stored in Swiss vaults.

XAUt commands approximately 50% of the tokenized gold market, which has grown to nearly $4 billion in aggregate value.

Together with Pax Gold (PAXG), XAUt accounts for roughly 90% of all gold-backed digital assets.

The core proposition is straightforward: eliminate the logistical friction of physical gold ownership while preserving its inflation-hedging characteristics.

Token holders can verify their allocated gold bars through Tether's lookup tools, transfer value globally in minutes, and theoretically redeem for physical bullion in Switzerland.

The asset has attracted institutional capital as a hedge against currency volatility, with Aurelion—a Nasdaq-listed treasury vehicle—holding $134 million in XAUt as its sole reserve asset.

From Stablecoin Giant to Gold Issuer

TG Commodities Limited, a subsidiary of Tether Limited, launched XAUt in January 2020. The timing coincided with rising geopolitical tensions and early pandemic uncertainty, conditions that historically favor gold allocation.

The founding team includes Brock Pierce, Reeve Collins, and Craig Sellars—the same individuals who established Tether Limited in 2014 under its original name, Realcoin. Paolo Ardoino, who became Tether's CEO in December 2023, now oversees both USDT and XAUt operations.

The design philosophy reflects Tether's broader stablecoin thesis: bridge traditional assets to blockchain infrastructure while maintaining centralized custody over the backing collateral.

XAUt emerged alongside the broader real-world asset (RWA) tokenization movement that gained momentum through 2024 and 2025. As gold prices surged past $4,000 per ounce—driven by central bank accumulation, inflation concerns, and geopolitical instability—demand for on-chain gold exposure has intensified.

Blockchain Infrastructure and Token Mechanics

XAUt operates as a standard token on multiple public blockchains rather than a proprietary ledger.

On Ethereum (ETH), it functions as an ERC-20 smart contract at address 0x68749665ff8d2d112fa859aa293f07a622782f38. On TRON (TRX), the token operates under the TRC-20 standard with identical economic properties.

Recent infrastructure expansions have extended XAUt's reach. In June 2025, Tether launched XAUt0—an omnichain version built on LayerZero's interoperability protocol—enabling transfers across Ethereum, TRON, TON (TON), Solana (SOL), and Polygon (POL) without wrapped tokens or traditional bridges.

The token can be fractionated to six decimal places, meaning the smallest transferable unit represents 0.000001 troy ounce.

At current prices, this amounts to approximately $0.005 per unit.

In January 2026, Tether introduced the Scudo denomination—one-thousandth of an XAUt or one-thousandth of a troy ounce—to simplify pricing and everyday transactions as gold prices rise.

The approach mirrors Bitcoin's (BTC) use of satoshis for smaller-value transfers.

The smart contracts handle token issuance and destruction while maintaining correspondence with physical reserves. When users purchase XAUt through Tether, new tokens are minted against allocated gold; redemptions burn tokens and release the underlying metal.

Supply Dynamics and Holder Distribution

Unlike algorithmic stablecoins or cryptocurrencies with predetermined emission schedules, XAUt's supply expands only when physical gold enters storage. There is no maximum supply cap—issuance is constrained solely by demand and Tether's gold acquisition capacity.

As of Q1 2025, Tether reported more than 7.7 metric tons (approximately 246,523 ounces) of physical gold backing XAUt in circulation. By late 2025, that figure had grown substantially as the token's market capitalization doubled.

Tether itself maintains substantial gold holdings beyond XAUt backing.

According to Jefferies analysis from late 2025, the company held approximately 116 tons of gold—104 tons supporting USDT reserves and 12 tons backing XAUt—positioning it among the largest non-central bank gold holders globally.

On-chain data shows concentrated holdings among top addresses. In October 2025, two whale addresses acquired 7,342 XAUt (approximately $32.8 million) within two weeks, illustrating how large purchases can reduce circulating supply and amplify price movements in a relatively thin market.

The token charges no ongoing custody fees—a structural advantage over competitors—though purchases and redemptions through Tether incur a one-time 25 basis point fee. Standard blockchain gas fees apply for on-chain transfers.

Performance Characteristics Across Market Conditions

XAUt's price tracks the spot price of gold with modest deviations attributable to exchange liquidity and supply-demand dynamics in token markets. During gold's 2025 rally—which saw bullion break through $3,000 and then $4,000 milestones—XAUt appreciated roughly 58% year-over-year.

The token has demonstrated distinct behavior during crypto market volatility. In late 2025, as Bitcoin fell from above $126,000 to below $85,000, gold-backed tokens gained traction as traders rotated into stable-value assets.

XAUt's market cap doubled during this period, reaching approximately $2.3 billion.

Trading volumes remain lower than PAXG on many platforms, with 24-hour volumes typically ranging between $20 million and $100 million depending on market conditions. This translates to somewhat wider bid-ask spreads compared to its primary competitor.

The token has served as a hedging instrument for cryptocurrency portfolios seeking exposure to a non-correlated, inflation-resistant asset without exiting the digital asset ecosystem entirely.

Institutional Treasury and DeFi Integration

The most significant institutional development came in October 2025, when Aurelion (formerly Prestige Wealth) completed a $134 million XAUt purchase, establishing the first Nasdaq-listed corporate treasury held entirely in tokenized gold.

Antalpha Platform Holding led the $150 million financing round, acquiring 32.4% equity and 73.1% voting control. Tether's investment arm contributed $15 million directly.

The structure positions XAUt as a balance sheet asset for institutions seeking gold exposure without traditional custody arrangements.

Hong Kong-based DL Holdings announced a $200 million dual-track strategy: $100 million for Tether Gold distribution and $100 million for Bitcoin mining operations—reflecting institutional appetite for both digital gold representations and mining exposure.

XAUt has integrated into decentralized finance protocols, where it serves as collateral for lending, liquidity provision, and structured products.

Platforms like Nexo now offer XAUt lending with yields around 6.25% APY, though such returns depend on platform-specific risk profiles.

The token's expansion onto TON—Telegram's blockchain with over 900 million potential users—represents a distribution channel optimization rather than a technological breakthrough, aiming to reach users already embedded in messaging-app financial ecosystems.

Regulatory Positioning and Compliance Framework

TG Commodities relocated from the British Virgin Islands to El Salvador in January 2025, obtaining authorization as a Stablecoin Issuer and Digital Assets Service Provider under the country's Digital Asset Issuance Law. The company now reports to El Salvador's National Commission of Digital Assets and its Financial Investigation Unit.

The entity maintains registration as a Money Services Business with the U.S. Financial Crimes Enforcement Network (FinCEN), which implies compliance with anti-money laundering requirements regardless of Tether's offshore domicile.

BDO Italia, a top-five global accounting firm, conducts quarterly reasonable assurance engagements on XAUt reserves.

These attestations confirm that gold holdings match outstanding tokens at specific points in time but do not constitute continuous audits of Tether's operations.

U.S. persons face significant restrictions. They cannot purchase or redeem XAUt directly through Tether unless they qualify as Eligible Contract Participants under commodities regulations. Residents of Cuba, North Korea, Iran, Syria, Singapore, and Crimea are entirely prohibited from platform access.

The new U.S. GENIUS Act bars compliant stablecoin issuers from holding gold as reserve backing, creating regulatory tension with Tether's gold-heavy reserve strategy for USDT. Tether has announced a separate GENIUS-compliant token (USAT) to navigate this constraint.

Structural Risks and Competitive Vulnerabilities

XAUt's centralized issuance model introduces counterparty risk that physical gold ownership does not carry. Token holders must trust TG Commodities to maintain reserves, execute redemptions, and operate transparently—a trust framework that rests on periodic attestations rather than real-time verification.

Tether's historical controversies over USDT reserve composition and transparency cast a shadow over XAUt, even though the gold-backed token operates under different custody arrangements.

Critics note that Tether publishes aggregate reserve data but does not tie specific tokens to specific bars on a per-user basis without individual requests.

Physical redemption requires a minimum of approximately 430 XAUt—one full London Good Delivery bar worth roughly $2 million at current prices—effectively limiting redemption access to institutional holders. Smaller holders must rely entirely on secondary market liquidity.

PAXG, issued by New York-regulated Paxos Trust Company, offers stronger regulatory oversight with monthly third-party audits supervised by the New York State Department of Financial Services.

For compliance-focused institutions, this structural difference may outweigh XAUt's liquidity advantages.

Tether's aggressive gold purchasing—Jefferies reports the company bought 26 tons in Q3 2025 alone, more than any central bank that quarter—raises questions about market concentration and potential price distortion in the tokenized gold segment.

Smart contract risk remains inherent to any blockchain-based asset. Bad approvals, phishing attacks, or lost private keys can result in permanent loss, with no recovery mechanism available regardless of the underlying gold backing.

Infrastructure Requirements and Competitive Positioning

For XAUt to maintain its market position, several conditions must hold. Tether must continue demonstrating reserve adequacy through credible third-party attestations, ideally advancing toward full continuous audits rather than point-in-time snapshots.

The omnichain XAUt0 infrastructure requires sustained development to compete with PAXG's established Ethereum liquidity. Cross-chain bridges introduce technical complexity and potential attack surfaces that single-chain tokens avoid.

Regulatory clarity in major markets—particularly the United States—will determine whether institutional adoption accelerates or stalls. Tether's roadmap includes a GENIUS Act-compliant regulatory push for Q1 2026 and plans to acquire 100+ tons of gold reserves during the year.

The Scudo denomination and integration with Tether's Wallet Development Kit suggest focus on payments and micro-transactions as use cases beyond pure store-of-value functions. Whether users will transact everyday purchases in gold-denominated units remains speculative.

XAUt's role in the broader tokenized commodities landscape depends partly on factors external to Tether's control: gold's macro performance, central bank purchasing patterns, and whether geopolitical instability continues driving demand for non-sovereign stores of value. The token functions as infrastructure for expressing gold exposure on blockchain rails—its utility persists so long as that expression maintains economic connection to physical metal in verifiable custody.