What is Tether Gold (XAUt)?

Tether Gold (XAUt) is a cryptocurrency that lets investors own physical gold without storage. Here's how it works, what backs it, and if it's worth considering.

What is Tether Gold?

Tether Gold (XAUt) is a tokenized commodity issued by Tether, the company best known for creating the world's largest stablecoin, USDT. Launched in January 2020, XAUt is designed to give investors exposure to the price of physical gold while allowing them to trade it like any other crypto asset.

Each XAUt token represents ownership of one troy ounce of physical gold on a specific London Good Delivery gold bar. The gold is stored in secure Swiss vaults, and token holders can verify which gold bar backs their tokens through Tether's online lookup tool. It’s available as an ERC-20 token on Ethereum and as a TRC-20 token on the TRON blockchain.

Unlike buying physical bullion, XAUt removes the need to arrange storage, insurance, or transportation. At the same time, it offers many of the benefits of crypto, including 24/7 trading, easy transfers between wallets, and DeFi compatibility.

Why is Tether buying gold?

Tether has significantly increased its exposure to gold in recent years for two main reasons: to support growing demand for Tether Gold and to strengthen its own balance sheet.

For XAUt itself, the reason is straightforward. Every new token issued must be backed by physical gold held in reserve. As investors purchase additional XAUt, Tether acquires more London Good Delivery gold bars and stores them in Swiss vaults. The company's gold holdings have steadily increased with tokenized gold adoption.

Beyond XAUt, Tether has also become one of the largest corporate holders of physical gold. The company has publicly stated that it views gold as a long-term store of value that complements its growing reserves of US Treasuries and Bitcoin. 

This strategy comes as central banks around the world continue buying gold at record levels, driven by inflation concerns, geopolitical uncertainty and efforts to diversify away from the US dollar.

There has also been speculation that Tether could eventually use more gold as part of its reserve strategy for USDT. However, this point is often misunderstood.

While Tether does hold gold on its balance sheet, USDT is not primarily backed by gold. According to the company's reserve disclosures, the vast majority of USDT reserves consist of cash equivalents, US Treasury bills, reverse repurchase agreements, and other highly liquid assets. Gold represents only a relatively small portion of the reserve portfolio and is not the primary asset backing the stablecoin.

How is gold linked to Tether?

Gold plays two distinct roles within Tether's business.

First, it directly backs Tether Gold. Every XAUt token is linked to one troy ounce of physical gold stored in Swiss vaults, giving holders legal ownership rights over that gold.

Second, gold forms part of Tether's broader corporate investment strategy. Alongside large holdings of US Treasury bills and Bitcoin, the company owns substantial physical gold as one of several reserve assets held on its balance sheet.

Although both uses involve gold, they serve different purposes. The gold backing XAUt belongs specifically to the token holders, while the gold held as part of Tether's corporate reserves supports the company's overall financial position.

Is Tether Gold backed by gold?

Yes. Tether states that every XAUt token is backed 1:1 by one troy ounce of physical gold that meets the London Good Delivery standard.

The gold is stored in secure vaults in Switzerland and allocated to token holders rather than pooled together without ownership records. This means each token corresponds to a specific gold bar, and holders can use Tether's online verification tool to identify exactly which bar backs their tokens.

Because the gold is allocated, XAUt differs from some forms of paper gold or exchange-traded products where investors may only have indirect exposure to a pool of assets.

Tether also publishes information about the total amount of gold backing XAUt, allowing investors to compare the circulating supply with the corresponding gold reserves.

Is Tether Gold legit?

Tether Gold is generally considered one of the largest and most established tokenised gold products in the cryptocurrency market. It is issued by one of the most financially successful companies in crypto and has maintained its gold backing since launch.

However, opinions on Tether as a company remain divided.

On the positive side, Tether has built one of the world's largest digital asset businesses, generating billions of dollars in profits and managing tens of billions of dollars in reserves. USDT has become the dominant stablecoin for crypto trading globally, while XAUt has emerged as one of the leading gold-backed tokens by market capitalisation.

Tether also publishes regular reserve attestations conducted by independent accounting firms, providing insight into the assets backing both USDT and XAUt.

Critics, however, argue that attestations are not the same as full independent financial audits. For years, Tether has faced questions about the transparency of its reserves, particularly regarding USDT. The company has also settled regulatory investigations in the past, including a 2021 settlement with the New York Attorney General over historical disclosures relating to reserve backing, while neither admitting nor denying wrongdoing.

These controversies have largely centred on USDT rather than Tether Gold itself, but they continue to shape perceptions of the company.

How to buy Tether Gold

Buying Tether Gold is similar to buying any other cryptocurrency.

First, you'll need to create an account with a cryptocurrency exchange that lists XAUt. Complete any required identity verification, deposit funds, and search for the XAUt trading pair, which is often available against USDT or US dollars.

After purchasing the token, you can leave it on the exchange or transfer it to a self-custody wallet that supports Ethereum or Tron.

Some of the major cryptocurrency exchanges that have listed Tether Gold include:

• Binance

• Bybit

• Bitfinex

• MEXC

How to stake Tether Gold

Some DeFi protocols allow users to deposit XAUt into lending or liquidity pools, where they may earn yield. In these cases, the returns come from borrowers, trading fees, or protocol incentives rather than proof-of-stake mechanisms.

Some centralised exchanges have also periodically offered earn products that include XAUt, although availability changes frequently and returns are typically lower than those offered on more volatile cryptocurrencies.

Tether Gold vs Pax Gold

Tether Gold and Pax Gold (PAXG) are the two largest gold-backed cryptocurrencies, and both aim to track the price of physical gold by backing every token with one troy ounce of allocated bullion.

The biggest difference lies in the companies behind them.

Pax Gold is issued by Paxos, a New York-regulated financial institution that operates under oversight from the New York State Department of Financial Services (NYDFS). Paxos has traditionally placed a strong emphasis on regulatory compliance and transparency.

Tether Gold, meanwhile, is issued by Tether, one of the largest companies in the crypto industry. While Tether operates globally and publishes reserve attestations, it has faced greater scrutiny over its broader reserve disclosures than Paxos.

From a technical perspective, both tokens offer similar exposure to gold prices and can be transferred on blockchain networks. However, PAXG is available primarily on Ethereum, while XAUt supports both Ethereum and TRON, giving users additional network options.

For investors deciding between the two, the choice often comes down to trust in the issuer, preferred blockchain ecosystem, and exchange availability. Those already using Tether's products may prefer XAUt for convenience, while investors prioritising regulatory oversight may lean towards PAXG.

Don’t forget the tax bill…

Tether Gold brings one of the world's oldest safe-haven assets onto the blockchain, but regardless of the underlying asset, if you’ve got profits, it’s all the same to the tax man. Koinly can help you calculate crypto taxes, including for tokenised assets like XAUt. Sign up for free and let Koinly calculate your taxes automatically today.