Can you imagine a crypto-native company steadily buying gold at a scale approaching that of central banks?
According to Bloomberg, USDT issuer Tether has become one of the world’s largest holders of gold, currently owning about 140 metric tons worth roughly USD 23 billion. Over the past year alone, Tether reportedly purchased more than 70 tons of gold to bolster its reserves and support the issuance of its gold-backed stablecoin—nearly exceeding the reported annual purchases of most national central banks.
Behind this large-scale accumulation, Tether is not speculating on gold prices. Instead, it is building a long-term, scalable physical gold supply framework to support its tokenized gold product, XAUt (see also: A New Narrative in the “$5,000 Era”: How to Understand Tokenized Gold).
1. What Is XAUt?
According to the latest whitepaper released on January 27, 2025—Relevant Information Document – Tether Gold (XAU₮)—Tether Gold (XAUt) is a gold-backed stablecoin issued by TG Commodities, S.A. de C.V., a company incorporated in El Salvador.
Each XAUt token represents ownership of one troy ounce (approximately 31.1035 grams) of physical gold that meets London Bullion Market Association (LBMA) delivery standards and is stored in Swiss vaults. When on-chain transfers occur, the system automatically reallocates ownership of the underlying gold, ensuring that each token always corresponds to specific physical assets.
The physical gold is held in a high-security vault in Switzerland. While the custodian is an affiliated entity, it operates independently, with separate financial accounts and client records. Users can also visit the official lookup website to enter their on-chain address and view the serial numbers, weight, and purity of the gold bars backing their holdings.
Physical redemption is only available in the form of whole gold bars. As individual bars vary in weight (typically between 385 and 415 troy ounces), the whitepaper recommends holding at least 430 XAUt to ensure sufficient coverage. Any excess tokens are returned to the user after settlement. Redemption must take place in Switzerland, or users may request Tether to liquidate the gold on the Swiss market and return the proceeds in USD, net of fees.
Source: Tether
It is also worth noting that TG Commodities has been authorized by El Salvador’s National Commission of Digital Assets (CNAD) as a regulated stablecoin issuer and an approved Digital Asset Service Provider (DASP). The company is wholly owned by Tether Holdings and Tether Operations.
The origins of XAUt can be traced back to late 2019, when Paolo Ardoino, then CTO of Bitfinex and Tether, disclosed plans to launch a gold-backed stablecoin. The first XAUt whitepaper was officially released on January 28, 2022.
Few could have anticipated that, just four years later, Tether would emerge as a gold buyer on par with sovereign central banks.
2. Tether: A New Force in the Gold Market
As stated in the whitepaper, each XAUt token represents ownership of one ounce of physical gold. Tether commits that every XAU₮ in circulation is backed by an equivalent amount of physical gold, all stored in Swiss vaults with top-tier security.
As of this writing, XAUt has a total market capitalization of approximately USD 2.7 billion, representing around 1,329 gold bars, or 16,238.4 kilograms of physical gold.
Source: Tether
Notably, CEO Paolo Ardoino has stated publicly that Tether plans to allocate 10%–15% of its investment portfolio to physical gold. At present, the company purchases roughly 1–2 tons of gold per week and intends to continue doing so to secure a stable, long-term supply.
Bloomberg estimates that, over the past year alone, Tether added more than 70 tons of gold to its holdings to reinforce reserves and support gold-backed token issuance. Based on Tether’s disclosed financial data for the first three quarters of 2025, full-year profits are projected to approach USD 15 billion, while gold and Bitcoin holdings stand at approximately USD 12.9 billion and USD 9.9 billion respectively, together accounting for about 13% of total reserves.
To reach its stated 10%–15% gold allocation target, Tether would need to purchase an additional USD 2–3 billion worth of gold—effectively doubling the current scale of XAUt.
This is why some institutions now regard Tether as a major marginal buyer that cannot be ignored in the gold market. Research from Jefferies suggests that in Q2, Tether’s gold purchases accounted for roughly 14% of total central bank gold buying, with the share remaining around 12% in Q3. Notably, the timing of the second leg of gold’s recent price rally closely coincides with the acceleration of Tether’s buying pace.
Given Tether’s strong profitability and the resilience of its stablecoin business during recent crypto market volatility, this accumulation strategy does not appear financially aggressive.
Source: Wallstreetcn
3. How Should We View Gold-Backed Stablecoins?
Of course, Tether is far from alone in targeting the multi-trillion-dollar, investment-grade tokenized gold market.
Over the years, several companies have attempted to bring gold ownership on-chain. One early example is Digix, which launched the gold-backed stablecoin DGX. Each DGX token was backed by 1 gram of LBMA-certified gold with 99.99% purity, stored in vaults at The Safe House in Singapore.
Another, more widely known product is PAXG. In 2019, Paxos Trust Company introduced PAXG, a gold token approved by the New York State Department of Financial Services (NYDFS). Built on Ethereum as an ERC-20 token, each PAXG represents one troy ounce of standard delivery gold stored in professional London vaults.
Paxos users can redeem PAXG for fiat currency, unallocated gold, or physical gold bars. They can also verify on-chain the serial number, refiner, weight, and purity of the gold bars backing their tokens.
From a product design perspective, these gold-backed stablecoins share a clear objective: to make gold more divisible, more liquid, and more compatible with the usage patterns of the digital asset era.
However, unlike USD-pegged stablecoins, gold-backed stablecoins follow more complex valuation dynamics. Dollar stablecoins are built around demand for fully collateralized, instantly redeemable digital dollars. Gold-backed stablecoins, by contrast, are inevitably influenced by the cyclical volatility of the crypto market.
As a result, when stablecoin demand fluctuates sharply due to changes in market sentiment or liquidity conditions, that pressure may, in theory, transmit to the balance sheets behind these tokens—where a growing portion of the assets now consists of real, sizable gold reserves.
As players like Tether continue to expand their gold holdings, a key question emerges:
Is this a genuine digital rebirth of gold—or does it introduce a new source of volatility into an age-old store of value?
This may be one of the questions every holder should reflect on, even as they benefit from rising gold prices.