The coin was created to meet “growing demand for a digital asset that provides exposure to the world’s most enduring
Stablecoin issuer Tether has announced the launch of Tether Gold (XAU₮), a new stablecoin that is pegged to physical gold, in response to “growing demand for a digital asset that provides exposure to the world’s most enduring asset and a geopolitical need for an alternative financial system.”
According to a press release shared with Finance Magnates, the coin is available as an ERC-20 token on the Ethereum blockchain and as a TRC20 token on the TRON blockchain; each token represents ownership of one fine troy ounce of gold.
The new gold-backed stablecoin is also allegedly the only gold-backed stablecoin that “offers zero custody fees and has direct control over the physical gold storage.” Each of the gold bars is stored in a vault in Switzerland.
Geo-political tensions may have caused surges in crypto and gold prices earlier this month
Both cryptocurrencies such as Bitcoin and physical assets like gold are viewed as alternatives to fiat currencies during times of economic crisis and political tension. Indeed, the prices of both Bitcoin and Gold jumped during the tensions between Iran and the United States earlier this month.
As such, Paolo Ardoino, Tether’s chief technical officer, 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.”
He believes that “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,” he said in an announcement.
However, 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.
Earlier this month, CoinDesk reported that a class-action lawsuit alleging Tether and Bitfinex manipulated the bitcoin market was withdrawn by two plaintiffs in the Western District of Washington and re-filed with a new plaintiff in the Southern District of New York.