Tether Gold, or XAU₮, has further entrenched its position as the leading player in the tokenized gold market, with the combined market capitalization of gold-backed stablecoins breaking the $4 billion mark this week.
Stablecoins are cryptocurrencies that peg their value to another asset, like the US dollar. Stablecoins are more stable or less volatile than other cryptocurrencies.
As of Monday, January 26, XAU₮ comprises approximately 60% of the total circulating supply of gold-based stablecoins, and this has put Tether at an advantage when it comes to these kinds of assets.
This is due to the fact that investors are always looking for assets with liquidity, reserves, and a constant redemption model at all times, especially during a period of volatility.
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Macro Uncertainty Fuels Demand for Tokenized Gold
Gold-backed stablecoins have evolved from being a niche product to a strategic portfolio tool, particularly in 2025. The spot gold prices have increased to above $5,000 per ounce due to various factors such as inflation, currency, and geopolitical conditions, according to data from the LBMA.
While the conventional gold exchange-traded funds enable the trading and settlement of gold on the blockchain, the tokenized gold assets enable the gold investors to own the assets and back them with the physical bullion.
The ability to carry the assets has helped the tokenized gold gain the interest of the traders who hedge on-chain yet remain within the digital assets market.
Q4 Disclosures Confirm Full Physical Backing
This can be seen in the latest Q4 2025 reserve attestation, where it can be observed that the XAU₮ tokens are still backed by the physical gold reserves on a 1:1 basis.
The model can also be supported by the fact that the gold reserves held by the trust, which amount to 520,000 fine troy ounces, back almost an equal amount of tokens.
The gold held by the company is in the vaults in Switzerland, which meet the standards set by the London Good Delivery. The company is also regulated by the digital asset regulations in El Salvador, which gives more clarity to institutional investors in the complex and evolving global regulatory environment.
The company was able to add an estimated 27 metric tons to its physical gold reserves in the fourth quarter of the year, making it one of the top gold reserve holders in the world. It is also worth noting that the company holds more gold reserves than some countries due to the token-based issuance.
Tether Strengthens XAU₮ as Transparency Demand Grows
Tether has also been focusing on transparency, especially with the increase in tokenized assets. Tether has been referring to the regular attestations and on-chain verifications as the essential pillars of its issuance model. With the increase in regulations, including the EU’s MiCA and the SEC in the United States, investors have been demanding products that offer high levels of transparency.
Although the competitors, like Pax Gold (PAXG), are available in the market, the trend in the issuance and availability of capital suggests that the capital is still in XAU₮.
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