Tether gold token secures Shariah compliance certification

Tether’s gold-backed digital asset XAU₮ has received Shariah compliance certification, widening its potential use among Islamic banks, institutional investors and individuals seeking digitally accessible exposure to physical bullion.

The certification was issued by Amanah Advisors, an Islamic finance consultancy led by scholar Mufti Faraz Adam. It found that the token’s structure complies with core Islamic finance principles, including real ownership of an underlying asset, transparent backing and the absence of interest, leverage and speculative derivatives.

XAU₮ is issued by TG Commodities, S. A. de C. V., an affiliate of Tether. Each full token represents ownership of one troy fine ounce of gold held in secure vaults in Switzerland. The bullion is allocated to identifiable London Good Delivery bars, with details including serial numbers, purity and weight available for verification.

The endorsement could strengthen XAU₮’s appeal in the Gulf, South Asia, Africa and financial centres serving Islamic investors. It may also support the development of digital gold products for savings, wealth preservation, collateral, trade finance and takaful, the Islamic equivalent of insurance.

Islamic finance prohibits riba, or interest, and places restrictions on excessive uncertainty and speculative transactions. Gold also has specific trading requirements because it is treated as a ribawi commodity under Islamic jurisprudence. Transactions generally require clearly established ownership, full allocation and prompt settlement.

The certification assessed whether XAU₮ holders obtain genuine ownership rights rather than synthetic exposure to gold prices. Tether said the structure links blockchain-based tokens directly to allocated physical bullion and does not depend on futures, options or leveraged instruments.

One important consideration will be how the token is bought and sold on secondary markets. Amanah Advisors is expected to continue working with Tether on guidelines and governance arrangements covering trading practices, settlement and broader institutional adoption.

Secondary-market activity can raise additional Shariah questions, particularly when transactions involve delayed settlement, lending, interest-bearing products or derivatives. Certification of the token’s underlying structure does not automatically mean that every platform, trading method or financial product built around it will comply with Islamic rules.

Tether chief executive Paolo Ardoino said the certification would allow the company to expand access to digital gold while respecting established Islamic finance principles. The company plans to introduce multilingual educational material and regional communication programmes for retail and institutional audiences.

The development comes as Tether expands its role in global bullion markets. XAU₮ has grown into the largest tokenised gold product by market capitalisation, accounting for a substantial share of gold-backed digital tokens in circulation.

Holdings backing XAU₮ increased by 9.5% during the second quarter of 2026, even as bullion prices declined during the period. The rise indicated continued investor demand for direct, transferable and fully backed exposure to gold through blockchain networks.

Tether has also accumulated gold as part of the reserves supporting its wider operations. The group reported total gold holdings of more than 146 tonnes at the end of June, although only a portion of those reserves directly backs XAU₮. Other bullion is held within the reserve portfolio supporting its US dollar-linked token, USD₮.

Demand for tokenised gold has risen as investors seek assets combining the portability of cryptocurrencies with the perceived stability of precious metals. Unlike unbacked digital currencies, gold tokens are designed to represent claims on bullion stored by a custodian.

Such products can be transferred around the clock, divided into smaller units and held in blockchain wallets. These features can reduce some of the logistical barriers associated with purchasing, transporting and storing physical gold.

They also introduce risks. Investors depend on the issuer’s reserve management, custody arrangements, redemption procedures, legal structure and technological security. Access to physical redemption may involve minimum quantities, fees, identity checks and geographical limitations.

Shariah certification may help address religious compliance concerns, but it does not constitute a guarantee of investment performance or regulatory approval. Islamic investors and financial institutions may still conduct their own reviews before offering or acquiring the token.

The global Islamic finance industry has expanded beyond traditional banking and sukuk into asset management, fintech and tokenised real-world assets. Gold-backed tokens are viewed as a potentially strong fit because they combine a tangible commodity with digital settlement infrastructure.