24 Jan 2020 Jane Whitmoore
Tether Launches Physical Gold-Backed Stablecoin, Dubbed Tether Gold (XAUt)
One of the most controversial stablecoin projects to date, Tether, surprisingly announced the release of their gold-backed stablecoin – Tether Gold. The solid London Good Delivery gold bars will be stored in a Swiss bank.
TG Commodities Limited, the owner of both Tether (USDT) and Tether Gold (XAUt), explained that the increasing demand for digital representations of traditional assets has led to the launch of this project.
“Tether Gold gives direct exposure to the price of digital gold, as opposed to XAU exchange-traded funds. Also, the transaction utility of XAUt is very high, in contrast to the cumbersome process of buying, possessing, and storing physical gold bars,”, the Tether Gold whitepaper explains.
The new stablecoin is going to bring a fresh look on traditional gold markets, making it possible for non-institutional market players to buy and trade with real gold. XAUt is set to copy most of Tether’s USDT functionality, but with different issuing entity. As with Tether Gold’s brother, the XAUt tokens would coexist as a set of ERC-20 tokens on Ethereum’s blockchain, as well as TRC20 tokens on the TRON blockchain.
One of the most exciting features of XAUt is that each token is going to represent a real 50 troy ounce gold bar. Each bar will have a serial number, which can be checked on Tether Gold’s website.
Tether also explained that despite being able to be fractionalized up to 0.000001 XAUt, the minimum entry amount is set to 50 XAUt (which resembles 50 troy ounces of fine gold, worth around $75,000, as of press time). However, Tether also noted that exchanges would be able to sell fractionalized tokens on their platforms. For now, only Bitfinex and RenrenBit support the new stablecoin, with more exchanges coming soon.
Furthermore, Tether’s CTO Paolo Ardoino stated that the new stablecoin is going to “deal with high storage costs and access restriction when it comes to buying and keeping physical gold. Also, we provide traditional gold with high mobility and enhanced liquidity.”
Tether disclosed that transactions are going to be free, with zero custody fees. Only purchases and redemption will be feed, with a single 25 basis point charge for acquiring XAUt from Tether Gold, as well as some fees on withdrawals.
However, redemption seems harder than it sounds – users have to apply for a verified TG Commodities Limited account. Also, users have to accumulate one entire gold bar worth of XAUt to cash out for real gold. In order to receive the bar, users have to point a location in Switzerland where the gold will be transferred. The other option is to request Tether to actually sell the bar of gold and receive the fiat amount. The fee for transportation or selling physical gold is also 25 basis points.
Given the amount of controversy and speculations against Tether, their new venture may either prove to be a successful way to bring physical gold closer to the crypto enthusiasts or spark flames of disbelief in such undertaking. Nevertheless, gold is more and more utilized as a medium to store value. Physical gold managed to record a 22,32% price increase over the past 12 months, currently trading at $1,561.38 per troy ounce.
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