Tether announced that its tokenized gold product, XAUT, was backed by over 375,000 ounces of physical gold, equivalent to approximately 11.6 tons, as of September 30. The company stated that these gold bars are stored in Switzerland. Each XAUT token represents one fine troy ounce of gold and is issued by TG Commodities under El Salvador’s digital asset framework. This disclosure provides a rare insight into the reserve assets supporting one of the world's largest tokenized commodities. The reserves are subject to audits and are linked to a blockchain-based supply, granting investors a digital claim on physical gold.
Market Value Surges to $2.1 Billion
In October, XAUT's market capitalization experienced a significant increase, reaching $2.1 billion, up from $1.4 billion in the third quarter. This growth aligns with the broader rally in global gold prices, which have climbed to around $4,500 per ounce due to inflation pressures, geopolitical uncertainties, and increased central bank purchases. Tether CEO Paolo Ardoino attributed this growth partly to heightened demand from retail investors in emerging markets. Ardoino noted in a recent interview with CoinDesk that there has been a surge in interest from users in countries facing unstable local currencies. He explained that tokenized gold offers these individuals a method to preserve value and facilitate rapid cross-border fund transfers.
Investor Takeaway
XAUT's rapid expansion underscores the growing appeal of blockchain-based metals among savers in economies grappling with inflation and limited access to traditional gold markets.
Tokenized Gold Gains Traction
Tokenized gold enables investors to hold a blockchain-based representation of physical gold without the need for physical delivery or storage management. These tokens can be transferred using crypto wallets, facilitating easier trading compared to physical bullion or traditional exchange-traded funds. This product is particularly attractive to investors in regions with underdeveloped financial infrastructure or where citizens encounter capital controls. It also facilitates instant settlement and allows for fractional ownership, thereby lowering the barriers to gold investment. Ardoino mentioned in an earlier interview that for many individuals, XAUT serves as their initial exposure to digital commodities. Tether initially launched XAUT in 2020 and has consistently expanded its reserves as gold prices and digital asset adoption have grown. The company is also recognized as the issuer of USDT, the world's largest stablecoin by market capitalization, with over $115 billion in circulation. Its move into gold-backed assets signifies a broader trend toward tokenizing traditional commodities.
Outlook
The growth of XAUT is likely to continue as investors increasingly seek inflation hedges beyond fiat-backed stablecoins. The market for tokenized metals has expanded significantly, reaching a niche market value of $2.8 billion in 2025, with Tether and Paxos leading the sector. The sustained rise in gold prices and the integration of tokenized assets into decentralized finance (DeFi) protocols have further boosted interest from both retail and institutional investors. However, certain concerns persist regarding the transparency of auditing processes and the redemption procedures for large-scale holders. While Tether asserts it maintains full reserves and provides proof-of-assets through third-party attestation, some critics have advocated for more comprehensive disclosures. Nevertheless, the company's strategic focus on gold appears to be yielding positive results. Given the ongoing inflation and geopolitical risks, XAUT's combination of stability and accessibility is attracting a user base that extends well beyond the traditional bullion market.
Investor Takeaway
Tokenized commodities are poised to become a significant bridge between traditional stores of value and blockchain infrastructure, particularly if gold prices maintain their elevated levels.