Tether Gold (XAUT)

Investment and Trading

Tether Gold allows users to buy, hold, and trade gold digitally. Each token represents ownership of one troy ounce of physical gold stored in secure Swiss vaults. It offers 24/7 trading on various crypto exchanges, making gold more accessible and liquid than physical gold.

Hedging and Wealth Preservation

It serves as a hedge against inflation and economic uncertainty by providing a stable asset linked to gold’s price. Users can protect their wealth without dealing with the costs and logistics of storing physical gold.

Decentralized Finance (DeFi)

Tether Gold tokens can be used as collateral in DeFi platforms, enabling users to leverage their gold-backed assets for lending, borrowing, or other financial services within the crypto ecosystem.

Cross-Border Payments and Remittances

The token can be transferred instantly and securely across borders on blockchain networks, offering a simple way to send value globally without the challenges of moving physical gold.

Secure Store of Value

Tether Gold combines the stability of physical gold with blockchain’s transparency and security. Token holders have direct ownership of the gold and can redeem tokens for physical gold bars stored in Switzerland.

Cost Efficiency and Accessibility

It eliminates storage fees, insurance, and logistical challenges of physical gold. Fractional ownership allows investors to hold small amounts of gold, making it affordable and easy to use.

Transparency and Control

Users can verify the gold backing their tokens and have direct control over their holdings without custody fees, except for a small transaction fee when buying or redeeming.

Advantages of Tether Gold

• Physical Gold Backing: Each token represents ownership of one fine troy ounce of physical gold stored in secure Swiss vaults, providing a stable asset base.
• Digital Convenience: Tokens are easily transferable, tradable on exchanges, and usable within the crypto ecosystem, combining gold’s value with blockchain flexibility.
• No Custody Fees: Unlike physical gold storage, Tether Gold charges zero custody fees, reducing holding costs.
• Transparency: Investors can verify gold backing and track their gold allocation in real-time through Tether’s platform.
• Security: Blockchain technology ensures secure, immutable ownership records and protection against fraud.
• Redeemability: Tokens can be redeemed for physical gold with delivery options in Switzerland.
• Low Transaction Fees: Fees are generally lower than traditional financial transactions, making trading cost-effective.
• Portfolio Diversification: Offers a way to hedge against market volatility and inflation by combining traditional gold stability with digital asset benefits.

Disadvantages of Tether Gold

• Newer Asset: Launched in 2020, it lacks a long-term track record compared to traditional gold investments.
• Issuer Transparency Concerns: Some past concerns exist about the transparency of reserve management and backing.
• Regulatory Uncertainty: Changes in laws, such as restrictions on gold holdings for stablecoin issuers, could impact its future.
• Market Risks: Subject to smart contract and market risks inherent in cryptocurrencies.
• Redemption Fees: A 0.25% transaction fee applies when redeeming tokens for physical gold or fiat.
• Dependence on Tether: The value and trust depend on Tether Limited’s management and claims of full gold backing.

Tether Gold offers a modern, flexible way to invest in gold with the benefits of blockchain, but it is important to consider its relative newness and issuer-related factors.

Founders of Tether Gold

The founders of Tether Gold are Brock Pierce, Reeve Collins, and Craig Sellars.

Background of Founders

• Brock Pierce is an American entrepreneur who co-founded Tether and was involved in the early development of the stablecoin.
• Reeve Collins served as the first CEO of Tether and has co-founded several companies.
• Craig Sellars has played a key role in developing the infrastructure and protocol for Tether and has been the chief developer on the Omni platform.

These three individuals originally launched the precursor to Tether Gold and Tether itself, bringing together their expertise in technology and finance.

Investors in Tether Gold

Tether Gold is primarily backed and invested in by Tether Limited, the company behind the stablecoin USDT. Tether itself has become one of the largest private holders of physical gold, with over 116 tons stored in Swiss vaults, valued between $8.7 billion and $14 billion. This makes Tether a major player in the gold market, rivaling smaller central banks like those of South Korea and Hungary.

Institutional and Strategic Investments

Tether has expanded its gold exposure by investing in gold royalty companies such as Elemental Altus Royalties, Versamet Royalties, and Metalla Royalty & Streaming. These investments give Tether claims on hundreds of gold mines worldwide. The company is also exploring investments across the gold supply chain, including mining, refining, and trading.

Market and Investor Interest

Investors in Tether Gold include both individual and institutional participants attracted by the token’s liquidity, accessibility, and the ability to hold gold in a digital form. The token’s market cap has grown significantly, nearing $1.5 billion, as investors seek a liquid and convenient way to invest in gold. Tether’s partnerships, such as with Antalpha, further facilitate institutional participation by improving access to Tether Gold through lending and vault services.

Summary

• Tether Limited: The main investor and holder of physical gold backing Tether Gold.
• Gold Royalty and Mining Firms: Tether holds stakes in companies like Elemental Altus Royalties.
• Institutional Investors: Attracted by tokenized gold’s liquidity and accessibility.
• Individual Investors: Use Tether Gold for easier, fractional ownership of gold.

This combination of strategic corporate investments and growing market demand supports Tether Gold’s position as a leading tokenized gold asset.

Halal Status of Tether Gold

• Commodity-backed token: Tether Gold is a digital token backed 1:1 by physical gold stored in secure vaults. This aligns with Islamic finance principles that favor assets backed by tangible commodities like gold.
• Shariah compliance: Islamic finance scholars generally consider gold-backed cryptocurrencies halal because they represent ownership of a physical asset and avoid prohibited elements like interest (riba) and excessive uncertainty (gharar).
• Purpose and transparency: Tether Gold provides a clear purpose as a store of value and medium of exchange backed by real gold, which supports its halal status.
• Supporting evidence: Studies and Islamic finance perspectives indicate that gold-backed stablecoins like Tether Gold are compliant with Shariah law and suitable for halal investment.

Answer: Yes, Tether Gold is halal because it is backed by physical gold and complies with Islamic finance principles.