Tether Just Minted Nearly Half a Billion in Gold

Major stablecoin issuer has minted around $495 million in tokens, but not USDT. On-chain analytics firm Arkham shows that this time, the company minted its XAUt tokens, its flagship gold-backed digital currency. The move quickly drew significant attention in crypto circles, as it is the largest minting of gold-backed coins in recent memory.

Arkham tweeted:

USDT vs XAUt

Also known as Tether Gold, XAUt differs from the more familiar USD Tether, which has a supply of hundreds of billions of dollars. The latter is pegged to the Dollar but backed by a mixture of cash, Treasury bonds, and other assets. But with XAUt, the coin is backed by one ounce of pure 24-karat gold, locked away in a Swiss bank. The precious metal meets London Good Delivery standards.

To make the transaction more transparent, holders can track and verify gold using specific bar serial numbers. This helps resolve one of the most pressing issues of precious metal stablecoins. They have a direct claim on the physical gold, not just a promise or a guarantee from an authority.

The Size of the Transaction

The size of the transaction has highlighted the new XAUt push by Tether. According to analysts, the move created 119,670 XAUt tokens for $495 million.

It extends Tether Gold’s total market capitalization by more than 17%, from $2.5 billion before the transaction.

Why Gold-backed Tokens are Gaining Traction?

The activity marks an important milestone in gold-backed stablecoins. Fiat is under massive pressure, and investors are looking for an effective hedge. Gold has been a historic hedge against inflation ever since its abolition as a standard in 1971. However, investing in Gold is often considered a major hassle due to regulatory and geographical constraints.

Unlike conventional Gold investment methods, gold-backed stablecoins can move globally in minutes and can be fractionally owned, allowing investors with smaller capital to enter the fray. Additionally, institutional involvement in these gold coins is also increasing because of their tokenized nature and improving transparency standards.

Tokenized real-world assets continue to mature, stretching far beyond Gold and other metals. Stocks, bonds, and other commodities are increasingly being digitized at a fast pace, allowing new players to enter conventional yet proven asset classes.