Tether, the crypto company behind USDT, the world’s largest stablecoin, held more than 11.6 tonnes of gold bars to support the value of its tokenized gold offering as investor demand for the yellow metal surges.
The issuance by TG Commodities under El Salvador’s digital asset framework was backed by more than 375,000 ounces, approximately 11.6 tonnes, of physical gold as of September 30. According to a statement from the company, each token is backed 1:1 by one good troy ounce of gold, with reserves in Switzerland.
XAUT’s market cap increased by more than $1.4 billion in the third quarter as gold hit new record highs amid inflation concerns, geopolitical instability and rising demand from central banks. The token continued to rise and reached $2.1 billion by October, as gold reached an all-time high of $4,500.
Tether CEO Paolo Ardoino explained in a CoinDesk interview last week that the market cap growth was largely driven by increased demand from retail investors in emerging countries.
Tokenized gold allows investors to hold a blockchain-based representation of the physical asset in a crypto wallet without the complexities of custody or logistics storing bullion. It also makes the yellow metal accessible to investors who do not have access to other traditional derivative financial products such as exchange-traded funds (ETFs) or opening a metal account.
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