- Tether issues the gold-backed stablecoin XAUT, which is currently backed by 7.7 metric tons of gold valued at approximately $819 million.
- Though still smaller than major gold ETFs like SPDR Gold Shares, XAUT is emerging as a key part of Tether’s product suite.
USDT issuer Tether has revealed holdings of nearly 80 metric tons of gold, worth approximately $8 billion, as part of its reserve diversification plan. The company has a vault in some part of Switzerland where the precious metal is stored and run by the company. However, information about the exact location of the vault is kept away.
Tether Rules Gold-Backed Stablecoin Era
This trend marks a shift from the traditional situation, where financial firms rely on third-party custodians to store assets on their behalf. Tether has decided to operate its own vaults, claiming financial savings involved in having direct control.
Industry estimates suggest that the cost of external storage may be as high as 0.5% per year, which Tether aims to avoid by overseeing its own operations.
Upon reviewing the public financial statements released in March 2025, we find that precious metals currently account for approximately 5% of the company’s reserve portfolio. Here, gold covers a larger proportion.
Thus, the volume of gold under Tether’s control places it in league with large financial institutions, including UBS Group AG. Furthermore, Tether is now among a small group of private entities with gold holdings that rival those of some national treasuries.
Company Makes Big Bet With Gold Stablecoin XAUT
Besides the huge reserves of USDT balance, Tether produces XAUT, a gold-backed digital coin. XAUT is tied to one troy ounce of gold and can be redeemed into physical gold in Switzerland. As of now, 7.7 metric tons of gold back this token amounting to almost $819 million in value.
Though small in scale when compared to dominant gold ETFs like SPDR Gold Shares, which controls close to 950 metric tons, XAUT is viewed as a growing segment of Tether’s offering.
If XAUT’s market capitalization were to scale substantially, hypothetically reaching $100 billion, Tether could save hundreds of millions of dollars in storage costs with its own vault. Although it was a logical decision in terms of logistics and financial rationale to use physical gold as a strategy, Tether can experience legal challenges in certain jurisdictions.
U.S. and European Union regulatory frameworks are leaning towards preventing precious metals from being used as support instruments behind fiat-tethered stablecoins. The rules usually limit the reserves available only to their cash equivalents and short-term debt issued by the government.
It may cause issues for USDT in terms of regulation in regulated markets. Still, XAUT is an independent product, and since it’s a gold-pegged stablecoin, it’s exempt from similar restrictions.
The increase in the amount of Tether’s gold reserve coincides with the elevated prices of the precious metals market, as central banks in emerging economies also led inflows. As gold has increased by 25% year-over-year, the Tether plan highlights the industry’s need for hedging against fiat adversity.
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