Stablecoin issuer Tether has announced the launch of Tether Gold token, or XAUT, a new stablecoin that is pegged to physical gold.
A new entity, TG Commodities Limited (Tether Gold), digitizes the value of gold using a new token, XAUT.
One XAUT token represents one troy fine ounce of gold bar. XAUT tokens will be capable of being fractionalized up to six decimal places.
XAUT token is available as an ERC-20 token on the Ethereum blockchain and as a TRC20 token on the TRON blockchain.
“Tether Gold will purchase, or arrange for the purchase of London Good Delivery gold from a gold dealer in Switzerland, which will then be securely stored by a custodian in a vault in Switzerland. The gold will be insured by the custodian, and held for the benefit of XAUT token holders,” the XAUt whitepaper says.
There are minimum purchase and redemption amounts of XAUT. To get the gold tokens, buyers are required to buy at least a minimum of 50 XAUT, which represent 50 fine troy ounces. To redeem XAUT for the physical gold, sellers should have a number of tokens equal to the number of fine troy ounces of gold contained in the bar of gold. Gold bars vary in size and can be as big as 430 troy fine ounces, like LBMA gold bars.
If holders of gold-backed tokens decide to make a redemption for physical gold, they will be able to get their gold bars at a location of their choice in Switzerland or request that TG Commodities Limited attempt to sell the gold and receive the cash proceeds from that sale.
XAUT tokens will be tradable on exchanges in fractions as small as the exchanges permit. Currently, XAUT is listed on Bitfinex, Tether’s sister company.
Paolo Ardoino, Tether’s CTO, believes that “there is growing demand for digital exposure to physical gold, making the launch of Tether Gold a timely innovation in the crypto ecosystem. Tether Gold provides the combined benefits of both physical and digital assets, removing the drawbacks of holding gold in more traditional ways, such as high storage costs and restricted access.”
Tether’s gold-backed token joins a growing list of gold-backed stablecoins, including PAX Gold, Digix Gold, Tiberius, GoldMint, Ekon Gold, the Perth Mint Gold Token, and many others.