Tether widens gold strategy with XAUT loans

Tether is moving to turn its multibillion-dollar bullion base into an active lending instrument, with holders of its gold-backed XAU₮ token set to borrow against their digital claims on physical gold without selling the underlying asset.

The plan extends the company’s tokenised gold strategy into collateralised credit, a market structure already familiar to holders of bitcoin who use digital assets to obtain liquidity while keeping exposure to price movements. The new product is being developed with Ledn, the crypto lender known for bitcoin-backed loans, and is expected to allow XAU₮ holders to pledge tokenised gold as collateral for loans denominated in stablecoins.

The initiative gives Tether a new route to deepen the utility of gold held across its product base. The company’s bullion holdings, including reserves linked to USDT and XAU₮, have been estimated at about 154 tonnes, worth roughly $23 billion at market prices earlier this year. That scale places the stablecoin issuer among major private-sector gold holders and underscores how far its balance sheet has moved beyond a simple dollar-token model.

XAU₮ is structured as a token backed one-to-one by fine troy ounces of physical gold held in Switzerland. Each token represents ownership linked to specified gold bars that meet London Good Delivery standards. By the end of March, the token was backed by 707,747.139 fine troy ounces of physical gold, with the total market value of the reserves exceeding $3.3 billion. The number reflected a sharp rise from the end of 2025, when the reserves stood at just over 520,000 fine troy ounces.

The lending model is designed to let holders retain exposure to bullion while drawing liquidity, much as bitcoin-backed loans allow investors to avoid selling during market moves. Ledn has indicated that the product will follow the operating framework used for its bitcoin lending business, including a policy that pledged collateral is not lent out for interest. Loans are expected to be available through stablecoin rails, including USDT and USA₮, as the platform widens its hard-asset offering.

For Tether, the timing is significant. Gold has become a larger part of its reserve and investment narrative as demand for hard assets has grown amid concerns over inflation, geopolitical tension and confidence in fiat currencies. The company slowed gold purchases in the first quarter after heavy buying in late 2025, but it still added about six tonnes to reserves linked to USDT and another six tonnes to XAU₮ backing during the period. USDT reserves remained dominated by Treasury bills, but gold accounted for about 10 per cent of the reserve mix at the end of March.

The move also reflects a broader contest in the market for tokenised real-world assets. Gold-backed tokens have attracted investors seeking blockchain-based access to bullion, 24-hour trading and easier transferability than traditional vault holdings. Tether and Paxos remain among the most prominent issuers in the segment, while newer platforms are testing products that combine tokenised commodities with decentralised finance-style borrowing and yield strategies.

Supporters of the model argue that gold-backed lending can make bullion more flexible. A holder who would otherwise need to sell gold during a liquidity crunch can instead borrow against it, keeping exposure if prices rise. The arrangement may appeal to crypto investors who treat gold and bitcoin as parallel hedges against monetary risk, as well as to institutions seeking collateral that is less volatile than purely digital tokens.

The risks are also clear. Tokenised gold depends on custody, redemption terms, legal ownership claims and the issuer’s operational resilience. Market stress could test how quickly investors can redeem or transfer claims, especially if collateral values move sharply. Lending against the asset adds another layer of risk, including margin calls, liquidation thresholds and counterparty exposure to the lending platform. The promise that collateral will not be rehypothecated may reduce one concern, but it does not remove credit or operational risks.

Regulatory scrutiny is likely to remain a central issue. Stablecoin issuers are under growing pressure to provide detailed reserve disclosures, strengthen redemption protections and clarify the rights of token holders. Tether has expanded from dollar tokens into bitcoin, gold, payments, energy and other investments, making its business more complex than that of a conventional payment stablecoin operator. Its supporters point to profits, liquidity and scale; critics continue to call for deeper transparency around reserves and governance.

The gold-backed loan product could nevertheless strengthen XAU₮’s position in a market still small compared with conventional bullion investment. Exchange-traded gold funds, central-bank reserves and physical bars continue to dominate global gold exposure. Tokenised gold remains a niche, but its appeal is growing among investors who want a digital asset that is tied to a tangible commodity rather than to the price of a crypto network.