In the evolving landscape of cryptocurrencies, gold stablecoins have emerged as a revolutionary way to own and trade gold digitally. These tokens combine the time-tested value of physical gold with the unmatched efficiency and accessibility of blockchain technology.
And with gold surpassing the $4,000 mark for the first time, crypto investors are looking at gold stablecoins to gain exposure.
Below, we take a deeper look at gold stablecoins and highlight what you need to know before making an investment.
What Are Gold Stablecoins?
Gold stablecoins are cryptocurrencies that are pegged one-to-one to physical gold. Each token represents ownership of a specific amount of real gold held securely in vaults, often compliant with the London Bullion Market Association (LBMA) standards.
Unlike traditional gold investments, which require physical storage, insurance, and complex logistics, gold stablecoins allow investors to enjoy the benefits of gold with near-instant digital transactions, 24/7 trading, and fractional ownership.
These tokens operate on blockchain networks such as Ethereum, ensuring transparency, security, and ease of transfer. They eliminate many barriers to gold ownership, enabling users worldwide to invest in gold without the risks and costs associated with physical handling.
Key Benefits of Gold Stablecoins
- Liquidity and Accessibility: Trade gold-backed tokens instantly on global crypto exchanges anytime.
- Fractional Ownership: Buy and hold tiny fractions of gold tokens with high divisibility.
- Security and Transparency: Each token is verifiably backed by allocated physical gold stored in regulated vaults.
- Cost Efficiency: Lower fees and no need for physical storage or insurance.
- Seamless Redemption: Tokens can be redeemed for physical gold or fiat currency under certain conditions.
Using Gold Stablecoins as Collateral for Loans
Gold stablecoins like XAUT and PAXG not only offer a convenient way to own digital gold but also serve as valuable collateral for crypto-backed loans on decentralized and centralized borrowing platforms. Platforms such as Morpho—a popular decentralized finance (DeFi) protocol—allow users to deposit gold stablecoins as collateral to borrow other cryptocurrencies or stablecoins without selling their gold holdings.
By using gold-backed stablecoins as collateral, investors can unlock liquidity from their gold assets while retaining exposure to gold’s value appreciation. This process enables borrowing against a stable, hard asset rather than more volatile cryptocurrencies. The loans can be taken out quickly, often without credit checks, through smart contracts that provide transparent real-time verification of collateral holdings on the blockchain.
This emerging use case enhances capital efficiency for holders of tokenized gold, providing flexibility in portfolio management and enabling greater borrowing power with reduced risk. Furthermore, borrowing against gold stablecoins may help avoid triggering taxable events that occur upon selling physical or tokenized gold.
Overall, gold stablecoins integrated with DeFi lending and borrowing platforms like Morpho offer a modern, efficient solution for leveraging gold as a digital asset to access liquidity and fuel further investments or operational needs.
Trade Gold Stablecoins XAUT and PAXG on BTSE
BTSE, a leading fintech exchange, offers its users access to two prominent gold stablecoins—Tether Gold (XAUT) and Pax Gold (PAXG). These tokens have been instrumental in making gold ownership more accessible and digitally native.
Tether Gold (XAUT) on BTSE
BTSE first listed Tether Gold (XAUT) in May 2020. XAUT is issued by TG Commodities Limited and is one of the largest gold-backed stablecoins by market capitalization. Each XAUT token represents one troy fine ounce of physical gold stored in secure Swiss vaults adhering to the London Good Delivery standard. The token operates on multiple blockchains including Ethereum (ERC-20) and TRON (TRC-20), allowing for flexible and secure trading.
XAUT offers investors the ability to hold gold in a highly divisible digital format, with tokens divisible down to one-millionth of a troy ounce. This provides precise control over gold investments without the hassles of physical ownership. The backing physical gold can be redeemed or the tokens traded 24/7 on BTSE and other exchanges for liquid exposure to gold.
Tether, the company behind XAUT, is also known for its widely used USDT stablecoin, enhancing trust and recognition in the market. XAUT leverages Tether’s reputation and infrastructure for transparent and reliable gold tokenization.
Trade Pax Gold (PAXG) on BTSE
BTSE also supports Pax Gold (PAXG), which was founded in September 2019 by the Paxos Trust Company, a regulated financial institution based in New York. Paxos is known for pioneering blockchain-based asset tokenization under stringent regulatory compliance.
Each PAXG token equates to one fine troy ounce of LBMA-certified physical gold stored primarily in Brinks vaults in London. PAXG is an ERC-20 token on Ethereum, providing users with secure, fast, and transparent access to gold value. Unlike many cryptocurrencies, PAXG holders own actual gold, with tokens being redeemable for physical gold bars or fiat currency through Paxos.
PAXG offers cost-efficient gold ownership with zero storage fees, low minimum purchases, and near-instant settlement versus traditional gold ETFs or bullion. The combination of Paxos’ trust company status and ongoing third-party audits of the gold reserves ensures a high level of security and investor confidence.
Why Choose BTSE for Gold Stablecoins?
BTSE is committed to offering a seamless and secure platform for trading gold-backed stablecoins. By listing both XAUT and PAXG, BTSE provides its users with diverse options for digital gold exposure, backed by distinct trusted entities. This diversity enhances liquidity and trading opportunities, allowing users to leverage the benefits of stable digital gold assets amid volatile market conditions.
