Tether is extending its tokenized gold strategy by enabling users to borrow against XAUT, its gold-backed token. The move leverages the company’s $23 billion gold stockpile to offer loans without requiring holders to sell their underlying bullion, according to CoinDesk.
The program functions similarly to bitcoin-backed lending services, where borrowers use crypto assets as collateral to access liquidity. Tether’s gold reserves — 23 billion in physical bullion — back the XAUT token supply, effectively collateralizing the new loan product on-chain. No specific borrowing rates or terms have been disclosed.
While Tether has faced regulatory scrutiny over its stablecoin reserves, the gold-backed loan initiative operates in a less regulated corner of digital assets. The U.S. Commodity Futures Trading Commission has previously classified tokenized commodities like XAUT as subject to existing commodities laws, though the SEC has not issued specific guidance on gold-backed lending programs.
With a total stablecoin market capitalization exceeding $150 billion, Tether remains the dominant issuer. Its gold-backed token XAUT holds a small fraction of the sector, with a market cap under $1 billion. Bitcoin’s recent rally to $72,000 has correlated with increased demand for collateralized lending across crypto platforms.
Reactions from the decentralized finance community have been mixed. Proponents argue tokenized gold lending unlocks new liquidity without forcing asset sales, while critics question Tether’s transparency and risk management practices given its history of reserve controversies.