Tether Gold: What Is It and How Does XAUt Work?
In the evolving landscape of digital finance, Tether Gold (XAUt) has emerged as a prominent solution for investors seeking the stability of precious metals combined with the efficiency of blockchain technology. As a Real-World Asset (RWA) token, Tether Gold offers a digital alternative to traditional gold ownership, allowing users to hold, trade, and transfer gold value globally at internet speed. Understanding tether gold what is it involves looking at its unique 1:1 backing, its role as a hedge during market volatility, and Tether’s recent strategic expansions into the physical gold marketplace.
Origin and Issuance
Launch and Issuer
Tether Gold (XAUt) was launched in early 2020 by TG Commodities Limited, a subsidiary of Tether Limited (the company behind the world’s largest stablecoin, USDT). While Tether is primarily known for fiat-pegged assets, XAUt was developed to address the demand for a digital asset backed by a physical commodity with a multi-millennial track record of value preservation.
Purpose
The primary goal of XAUt is to merge the scarcity and store-of-value properties of physical gold with the liquidity and transportability of digital assets. In periods of high crypto market volatility—such as the early 2026 flash crash where over $260 billion exited the crypto market in a single day—tokenized gold serves as a defensive tool for portfolio diversification.
Core Mechanism and Backing
1:1 Physical Peg
Each XAUt token is legally tied to exactly one fine troy ounce of gold on a London Good Delivery bar. Unlike some "paper gold" products that track a price index through derivatives, XAUt represents direct ownership of the physical metal. This ensures that the token’s value remains pegged to the real-time spot price of gold.
Custody and Location
The physical gold backing XAUt is stored in high-security vaults located in Switzerland. These facilities are known for their stringent security protocols and neutral jurisdiction, providing an extra layer of safety for global holders. As of early 2026, Tether reported holding more than $5 billion in surplus collateral, which includes gold and U.S. Treasuries, to bolster its ecosystem’s resilience.
Individual Allocation
A unique feature of Tether Gold is individual allocation. Specific gold bars are assigned to the on-chain addresses of holders. Each fine troy ounce of gold can be identified by a unique serial number, weight, and purity, which users can verify through Tether’s official lookup tools.
Technical Specifications
Blockchain Availability
XAUt was initially launched as an ERC-20 token on the Ethereum blockchain. To improve accessibility and reduce transaction costs, it has since expanded to other networks, including TRON and Arbitrum, utilizing protocols like LayerZero for cross-chain interoperability.
Divisibility
Physical gold bars are often inaccessible to retail investors due to high costs. XAUt solves this through fractionalization. The token is divisible to six decimal places, allowing users to purchase and transfer as little as 0.000001 fine troy ounces, making gold investment accessible to a broader audience.
Verification and Transparency
Reserve Reports and Audits
To maintain trust, Tether provides transparency reports and works with independent auditors, such as BDO Italia. These audits verify that the total circulating supply of XAUt tokens exactly matches the amount of physical gold held in custody. Holders can enter their Ethereum or TRON address on the Tether Gold website to see the specific details of the gold bars backing their tokens.
Investment Comparison
XAUt vs. Physical Gold and ETFs
Compared to physical gold, XAUt eliminates the challenges of secure storage, insurance, and physical transport. Compared to Gold ETFs (Exchange-Traded Funds), XAUt offers 24/7 market accessibility and direct ownership. Most ETFs only track the price and do not allow for the redemption of physical bars, whereas XAUt provides a path to physical delivery for qualified users.
Redemption and Fees
Verified users who meet the minimum requirements (typically 50 XAUt) can request the physical redemption of their tokens. This process involves exchanging the digital tokens for physical gold bars delivered to a designated location or sold for USD proceeds. Tether charges a one-time issuance or redemption fee of 25 basis points (0.25%), notably avoiding the recurring management or custody fees often associated with traditional gold funds.
Market Expansion and Strategic Partnerships
The $150M Gold.com Investment
In a landmark move for the RWA sector, Tether announced on March 26, 2025, that it had acquired a 12% ownership stake in Gold.com for $150 million. According to reports from Crypto Briefing and Bloomberg, this strategic investment values the premier online gold marketplace at approximately $1.25 billion.
This partnership directly facilitates the integration of XAUt onto the Gold.com platform. As a result, users will eventually be able to utilize Tether Gold tokens to purchase a variety of physical gold products, such as coins and bars, significantly enhancing the token’s real-world utility and liquidity.
Use Cases in the Crypto Ecosystem
Beyond simple holding, XAUt is increasingly integrated into Decentralized Finance (DeFi). It is used as collateral for loans in protocols like Sky (formerly MakerDAO), allowing users to remain long on gold while gaining liquidity in stablecoins like USDT. For those looking to hedge against inflation or the 30% year-to-date declines seen in assets like Bitcoin during geopolitical shocks, XAUt provides a blockchain-native haven. For investors looking to enter this market, platforms like Bitget offer the necessary liquidity and security to trade XAUt alongside other major digital assets.
