Tether Gold (XAUt) Stablecoin Review
- Fund Managers
- Institutional Investors
Tether Gold (XAUt) is a tokenized version of gold issued by TG Commodities Limited. One XAUt token is equal to one troy fine ounce (t oz) of a London Good Delivery gold bar. Investors can redeem Tether Gold (XAUt) for physical gold bars or liquidate their tokens into fiat for USD wire transfers.
Tether Gold Token - 2020 Comprehensive Review
Tether Gold Token Overview
|Hardware Wallets||Ledger, Trezor|
Pros and Cons
- Easily Accessible - Tether Gold (XAUt) may be acquired through Bitfinex (for limited volume) without needing to deal directly with the issuer, providing retail investors with easy access to XAUt.
- Verifiable Ownership - Tether Gold (XAUt) tokens are stamped with unique identifiers containing the serial numbers, weight, and purity of their physical gold equivalent. Using a gold allocation lookup service, holders can use this information to crosscheck the allocation and ownership of their tokens against the physical gold bars.
- Zero Custody and Security Costs - Physical gold is expensive to store and transport securely. Tether Gold (XAUt) provides holders with all of the benefits associated with gold without the attendant custody and security costs.
- Fractional Ownership - Tether Gold (XAUt) provides individuals with an opportunity to own a fraction of gold bars (as low as 0.000001 XAUt) of the troy fine ounce on supported exchanges.
- Customer Support - TG Commodities Limited offers a global customer support team that is available via email.
- Limited Trading Options - Tether Gold (XAUt) is currently only listed on Bitfinex. As Bitfinex has ceased service to US corporations and individual clients, this makes XAUt unavailable to US customers.
- Regulatory Risk - There’s no information on whether Tether Gold (XAUt) has been examined or approved by any regulator under the laws of any jurisdiction.
- Minimum Purchase Requirements - The minimum order amount when buying Tether Gold (XAUt) directly from the issuer is set to 50 XAUt. The minimum order requirement—equivalent to about $75,000 when XAUt first became available—makes the token unaffordable for many retail investors.
- Verification Fee: - Tether Gold's (XAUt) issuer charges a non-refundable verification fee of 150 USD, payable in Tether (USDT). After the verification fee has been paid, the issuer still maintains the sole discretion to approve or reject an applicant's account.
- Reserve Transparency - In the past, Tether Gold's (XAUt) issuer has been accused of lacking reserve management transparency. The fact that the issuer explicitly “reserves the right to modify and replace XAUt tokens from time to time in its sole discretion” in its whitepaper is a valid source for concern.
- Redemption Requirements - In order to redeem Tether Gold (XAUt) for physical gold bars, you’ll need a verified TG Commodities Limited account, own a minimum of 430 XAUt tokens (equivalent to one full bar of gold), and a local Swiss address at which the gold bar will be delivered.
- Excess Fees - Tether claims that there are no custody fees associated with Tether Gold (XAUt) holdings. Despite this, Tether charges a 25 basis point fee of the gold's value, plus a delivery fee when you redeem the token for physical gold bars. The issuer also charges a 25 basis point fee on the value of the XAUt when redeemed for fiat.
Tether Gold Token (XAUt) Interest Rates
|Platform||APY Rate||Lockup Terms||Deposit Amounts|
|Celsius Network||4.51%||Flexible||$1 - $1,000,000|
Tether Gold Token Alternatives
Tether Gold (XAUT) FAQ
What is Tether Gold (XAUT)?
Tether Gold (XAUt) is a stablecoin backed by gold. It is issued by TG Commodities Limited as a tokenized representation of physical gold, in which 1 XAUt token is equal to 1 troy fine ounce of a London Good Delivery gold bar.
Is Tether Gold legitimate?
TG Commodities Limited, Tether Gold's issuer, doesn’t appear to be subject to any regulatory authority in any jurisdiction. The company is affiliated with Tether Operations Limited, the company responsible for issuing the Tether (USDT) stablecoin.
Is Tether Gold an ERC-20?
Yes. Tether Gold is issued as an ERC-20 token on the Ethereum (ETH) Blockchain.
Where can I buy Tether Gold (XAUT)?
Can I earn interest on Tether Gold (XAUT)?
Yes. You can earn interest on Tether Gold (XAUt) deposits through Celsius Network. Interest earned on Tether Gold (XAUt) deposits starts at 3% per annum.
What are the fees associated with purchasing and redeeming Tether Gold (XAUT)?
There are no fees associated with purchasing Tether Gold (XAUT) directly from the issuer. Tether charges a 25 basis point fee plus applicable fees when you redeem the tokens for fiat or physical gold bars. Standard bid/ask spread may apply when trading Tether Gold (XAUt) on an exchange.
Tether Gold (XAUT) Summary
Precious metal backed (collateralized) stablecoins offer a considerable amount of utility and should be considered by both retail and institutional-level investors. Unfortunately, transactions involving Tether Gold (XAUt) carry many of the same risks as Tether (USDT), as they are issued and maintained by the same organization.
- Ethereum Ecosystem: - Tether Gold (XAUt) is available on Ethereum (ETH) as an ERC-20 token. This enhances the token's liquidity and overall availability across exchanges, platforms, and wallets.
- Verifiable Ownership: - Tether Gold (XAUt) tokens are stamped with unique identifiers that include the serial number, weight, and purity of the corresponding physical gold bar. You can confirm the gold associated with your tokens by using Tether's gold allocation lookup service.
- Fractional Ownership: - If you purchase Tether Gold (XAUt) tokens through exchanges, you can buy a fraction of the token up to 6 decimal places (as low as 0.000001 XAUt).
- Indirect Access: - Retail investors can trade for and acquire Tether Gold (XAUt) on Bitfinex without needing to deal directly with the issuer.
- Regulatory Risks: - Tether Gold (XAUt) doesn’t appear to have been reviewed, approved, or regulated by any governing body in any jurisdiction.
- Reserve transparency: - Tether Gold (XAUt)’s issuer has yet to provide information regarding audits, and has reserved the right to replace or modify XAUt tokens at its sole discretion.
- Geographic Restrictions: - People from or in the US, Canada, the British Virgin Islands, or Switzerland are currently restricted from purchasing Tether Gold (XAUt) directly from the issuer. Persons from or in any jurisdictions that do not meet international AML/CTF standards are also not allowed to purchase tokens from the issuer.
- High Minimum Orders: - The minimum order when purchasing Tether Gold (XAUt) directly from the issuer is 50 XAUt, which may be unattainable for most retail traders and investors.
- Redemption Requirements: - In order to redeem Tether Gold (XAUt) tokens for physical gold, you’ll need to own at least 430 XAUt tokens, provide a Switzerland address where the gold will be delivered, and be ready to pay 25 basis points on the value of the gold, plus the associated transportation costs.
High minimum orders, unfavorable redemption requirements, geographic restrictions, and a lack of regulatory oversight combine to make Tether Gold (XAUt) an impractical and potentially risky option for retail investors. Blockfer recommends PAX Gold (PAXG) as a more viable alternative for retail and institutional investors seeking exposure to gold within the Ethereum ecosystem.