After the emergence of the first cryptocurrency, Bitcoin, the digital asset market began to expand rapidly. Over time, developers began migrating traditional financial instruments into the blockchain. This led to the idea of tokenizing real-world assets.
One result of this process was the creation of stablecoins backed by government currencies or other assets. One variety of such coins is tokenized gold.
Interest in tokenized gold is explained by the fact that gold is one of the largest global assets. As of March 2026, its market capitalization exceeds $3.6 trillion.
Demand for digital equivalents of gold continues to grow. In 2025, the growth rate of tokenized gold even surpassed the performance of the physical metal. For example, the market capitalization of the cryptocurrency XAUT increased more than fourfold during the year amid global economic instability.
What is tokenized gold?
Tokenized gold is a type of stable cryptocurrency issued on a specific blockchain network and pegged to the value of physical gold.
Typically, such cryptocurrencies are backed by real gold at a 1:1 ratio. However, the issuer’s reserves may also include other assets, such as U.S. dollars or government bonds.
The reserves are stored by the issuing company, which acts as a custodian*. Thanks to this structure, cryptocurrency holders can, in theory, exchange digital coins for physical gold under the terms set by the issuing company.
* Custodian — a financial organization or company that stores investors’ assets (such as gold, securities, or cryptocurrency) and ensures their safekeeping, accounting, and transaction processing on behalf of the owner.
Usually, one unit of tokenized gold corresponds to one troy ounce*.
* Troy ounce — a traditional unit of mass used for precious metals in the global market. One troy ounce equals 31.1035 grams.
How tokenized gold is issued
The issuance mechanism of such assets includes several stages.
- First, the issuer creates a smart contract for the cryptocurrency on a selected blockchain network, such as Ethereum.
- When the issuing company adds physical gold to its reserves, it issues a corresponding amount of cryptocurrency. The smart contract ensures that the value of the crypto asset remains linked to the price of gold. The reserves of the precious metal are regularly audited — usually at least once a month.
- If part of the gold is withdrawn from reserves, an equivalent amount of cryptocurrency is destroyed through a burning mechanism*.
* Crypto burning — a blockchain mechanism in which a certain amount of cryptocurrency is permanently removed from circulation. Usually, assets are sent to a special address without access to private keys, reducing the total supply.
After issuance, the cryptocurrency is listed on centralized and decentralized exchanges, where it becomes available for 24/7 trading.
Advantages of tokenized gold
Fractional ownership
When buying physical gold, investors usually purchase whole bars or exchange lots*.
* Lot — the standard minimum volume of an asset established by an exchange or financial platform for executing a trade.
The size of such a lot depends on the exchange or broker's rules and may be one ounce or another fixed amount.
Tokenized gold can be purchased in much smaller quantities. The minimum fraction may be as small as one hundred-millionth of an ounce.
This makes investing in precious metals more accessible: users can buy even a few grams of gold without having to purchase an entire bar.
Broader access to investment
On traditional financial platforms, investors must undergo identity verification procedures.
Banks and brokers may also temporarily restrict access to funds due to compliance checks or financial monitoring requirements.
In a decentralized environment, purchasing tokenized gold only requires a cryptocurrency wallet. These assets can be bought on decentralized exchanges such as Uniswap or Curve.
Convenient transfers
Transporting physical gold involves logistical challenges and high shipping and insurance costs.
Even transactions involving bank accounts that hold gold may be subject to restrictions and complex procedures.
Tokenized assets can be sent between wallets almost instantly and without paperwork.
Ease of storage
Physical gold requires secure storage such as safes or bank vaults.
Digital gold held in bank accounts is effectively controlled by financial institutions.
Tokenized assets can be stored in personal crypto wallets, where owners control access to their funds using private keys.
Transparency of transactions
Blockchain technology allows all transactions involving tokenized gold to be tracked. Any user can see the movement of funds on the network.
In traditional financial systems, such information is usually not accessible to clients.
Opportunities in decentralized finance
Tokenized gold can be used within the DeFi ecosystem.
Investors gain access to various instruments:
- lending
- yield farming*
- liquidity mining*
- digital asset trading
* Yield farming — a DeFi strategy in which users deposit crypto assets into special protocols or liquidity pools and receive rewards in the form of interest or additional cryptocurrency.
* Liquidity mining — the process of providing cryptocurrency to liquidity pools on decentralized exchanges to facilitate trading between assets. In return, users receive trading fees and additional protocol token rewards.
These mechanisms open additional opportunities to generate income.
Disadvantages of tokenized gold
Despite clear advantages, this asset also carries certain risks.
Counterparty risk
Cryptocurrency holders depend on the issuing company. In theory, it may freeze assets or provide inaccurate information about reserves.
In the case of serious violations, investors risk holding cryptocurrency not backed by real assets.
Limited liquidity
Although the market capitalization of tokenized gold is relatively high, liquidity on some platforms remains limited.
For example, liquidity on decentralized exchanges may be around $10 million. During large transactions, the cryptocurrency's price may deviate significantly from the price of real gold.
Regulatory uncertainty
Legal regulation of tokenized assets is still in the process of formation.
This reduces interest from large institutional investors and limits the growth of market liquidity.
Tokenized gold available on the market
As of March 2026, two of the most liquid gold-backed cryptocurrencies dominate the market:
- Tether Gold (XAUT)
- PAX Gold (PAXG)
Overall, there are several dozen similar projects.
Tether Gold (XAUT)
XAUT is the largest tokenized gold asset in the cryptocurrency market. Its market capitalization is approximately $2.9 billion, placing it among the top 30 cryptocurrencies.
The token was issued by Tether, known as the issuer of the popular stablecoin USDT.
XAUT is traded on many cryptocurrency exchanges, including:
- ByBit
- OKX
- Bitget
- Gate.io
- MEXC
It is also available on decentralized platforms.
PAX Gold (PAXG)
PAXG ranks second among tokenized gold assets, with a market capitalization of around $2.5 billion.
The token was issued by Paxos, a company known in the crypto industry for several stablecoins, including:
- Binance USD (BUSD) — currently discontinued
- Pax Dollar (USDP)
- PayPal USD (PYUSD)
- Global Dollar (USDG)