Tokenized gold and commodities explained
How gold-backed tokens like PAXG and XAUT work, what backs them, how redemption works, and how they compare with gold ETFs such as GLD.
Key takeaways
- Tokenized gold is a blockchain token that represents a claim on physical gold held by a custodian, usually one token per fine troy ounce of London Good Delivery bullion.
- As of October 6, 2026, CoinGecko put the tokenized gold category at about $5.9 billion, led by Tether Gold (XAUT, about $3.35 billion) and PAX Gold (PAXG, about $1.80 billion).
- Tokens remove ongoing storage fees for holders and trade around the clock, but direct redemption is limited to verified customers and, for physical delivery, large minimums.
- The two leaders sit under very different regimes: Paxos is now supervised by the US Office of the Comptroller of the Currency (OCC), while Tether Gold’s issuer is authorized in El Salvador.
- Gold ETFs such as GLD remain far larger: SPDR Gold Shares alone reported about $140.6 billion in net assets as of October 5, 2026.
What tokenized gold is
Tokenized gold is a digital token, issued on a public blockchain such as Ethereum, that represents ownership of or a claim on physical gold stored in a vault. The two largest products, PAX Gold (PAXG) and Tether Gold (XAUT), each set one token equal to one fine troy ounce of gold. A troy ounce is about 31.1 grams, the standard unit for precious metals.
The idea is not new. Gold certificates and pooled accounts have existed for decades. What changes is the ledger: ownership moves on a blockchain, settles in minutes at any hour, can be split into small fractions, and can be posted as collateral in on-chain lending markets. The token is only as good as the gold behind it and the legal structure linking the two.
How the backing works
Both leading issuers hold allocated gold, meaning specific, identifiable bars set aside for token holders rather than a general claim on a bank’s metal pool (known as unallocated gold). The bars meet the London Good Delivery standard set by the London Bullion Market Association (LBMA), the wholesale market’s quality benchmark. A Good Delivery bar weighs roughly 350 to 430 troy ounces.
- PAXG. Paxos says each token represents one fine troy ounce of a London Good Delivery bar stored in LBMA vaults in London, with no storage fees charged to holders. Paxos publishes monthly attestation reports, which are reviews by an outside accounting firm confirming that metal held matches tokens issued.
- XAUT. XAUT is issued by TG Commodities S.A. de C.V., an El Salvador company authorized by that country’s National Commission of Digital Assets (CNAD), according to Tether’s submission to Aave governance. The gold sits with an affiliated but legally separate Swiss custodian, and Tether says there are no ongoing storage or custody fees. Tether publishes quarterly attestations; its report for June 30, 2026 showed about 707,747 fine troy ounces (about 22 tonnes) backing the token.
An attestation is a point-in-time check, not a full audit of the issuer’s finances. It confirms that bars existed on a given date, which is narrower than continuous proof that the gold is unencumbered and legally ring-fenced for holders.
Redemption, and how it compares with gold ETFs
Redemption is where tokens and exchange-traded funds (ETFs) differ most. Most token holders exit by selling on an exchange. Only verified customers of the issuer can create or redeem tokens directly.
- PAXG can be redeemed for US dollars, for unallocated loco London gold (institutional clients), or for physical Good Delivery bars. A Binance.US support article states the physical option applies to holdings above 430 PAXG, roughly one full bar, and that Paxos charges creation and redemption fees.
- XAUT requires KYC (know your customer) onboarding with a $150 verification fee credited back on approval, and a 50 XAUT minimum for primary minting. Physical delivery is in Switzerland, or the gold can be sold there for fiat, per Tether’s Aave governance submission.
| Feature | PAXG | XAUT | GLD (SPDR Gold Shares) |
|---|---|---|---|
| Size | About $1.80B (CoinGecko, Oct 6, 2026) | About $3.35B (CoinGecko, Oct 6, 2026) | About $140.6B net assets (SSGA, Oct 5, 2026) |
| Ongoing holder fee | No storage fee (issuer) | No storage or custody fee (issuer) | 0.40% gross expense ratio |
| Custody | LBMA vaults, London | Affiliated Swiss custodian | HSBC Bank plc and JPMorgan Chase Bank |
| Direct redemption | Verified customers; bars above about 430 oz | KYC customers; delivery in Switzerland | Authorized participants in large baskets only |
| Main supervisor | OCC (federal trust charter) | CNAD, El Salvador | SEC-registered, exchange-listed |
The fee comparison has nuance. GLD’s 0.40% is deducted from the fund, so the gold behind each share declines slowly over time, according to State Street. Token issuers earn mainly on creation and redemption fees and on trading spreads, so a holder’s real cost depends on how often they enter and exit. ETFs also trade inside the existing brokerage, custody and tax reporting system, which many institutions require.
Market size and the gold price backdrop
As of October 6, 2026, CoinGecko listed the tokenized gold category at roughly $5.9 billion, with XAUT trading near $4,136 and PAXG near $4,142 per token. RWA.xyz, which tracks tokenized real-world assets, showed about $5.1 billion in distributed tokenized commodities across 138 assets on the same date, with XAUT at about $2.91 billion and PAXG at about $1.79 billion. The gap reflects different data methods and refresh timing, so figures should be compared within one source.
Token values move with the metal. Gold reached an all-time high of about $5,590 per ounce on January 28, 2026, according to MetalCharts, then fell back. Tether reported that gold declined 14.1% in the second quarter of 2026 while XAUT holdings still grew 9.5%. USAGold reported a spot price of $4,192.30 on October 2, 2026, and Fortune noted gold was up about 8% year over year as of October 1, 2026.
Other commodities remain small by comparison. RWA.xyz lists silver and agricultural tokens, but gold dominates the category. Paxos has also launched PAXGy, a yield-bearing version that earns returns in gold terms through gold leasing, which adds counterparty risk that plain PAXG does not carry.
Regulatory status
Paxos issued PAXG for years under a New York Department of Financial Services (NYDFS) limited purpose trust charter. On December 12, 2025, the OCC approved Paxos’s application to convert to a national trust bank, after which its US activity falls under OCC supervision, according to Paxos. XAUT operates under El Salvador’s digital asset law. Neither product is an SEC-registered fund, and holders do not get the investor protections that come with a registered ETF.
Risks to understand
- Issuer and custodian risk. Holders rely on the issuer and vault to keep bars segregated and to honor redemptions. Legal treatment in an issuer insolvency varies by jurisdiction.
- Redemption friction. Small holders typically cannot take delivery and depend on exchange liquidity, which can widen in stress.
- Attestation limits. Monthly or quarterly snapshots are weaker than continuous, full audits.
- Smart contract and chain risk. Token contracts can include freeze or blacklist functions, and bridged versions on other chains add technical risk.
- Price risk. The token tracks gold, which fell sharply from its January 2026 peak.
What to watch next
- Whether tokenized gold gains wider acceptance as collateral in DeFi lending and at prime brokers.
- Growth in yield-bearing gold tokens and the counterparty risks they introduce.
- Further US federal charters for token issuers, and how foreign-issued tokens are treated.
- Quarterly XAUT and monthly PAXG attestations for changes in reserves.
Sources and further reading
- CoinGecko tokenized gold category (figures as of October 6, 2026)
- RWA.xyz tokenized commodities dashboard (figures as of October 6, 2026)
- Paxos: OCC approves conversion to national trust bank
- Paxos PAX Gold product page
- Tether Gold issuer, custody and redemption details (Aave governance)
- State Street: SPDR Gold Shares (GLD) fund page
Frequently asked questions
Is tokenized gold the same as owning gold?
Not exactly. A token is a claim on gold held by a custodian, so its value depends on the issuer's backing, legal structure and redemption terms as well as the gold price.
Can any holder redeem PAXG or XAUT for physical bars?
No. Direct redemption is limited to verified customers of the issuer, and physical delivery requires large minimums, roughly a full Good Delivery bar for PAXG and delivery in Switzerland for XAUT.
How large is the tokenized gold market?
CoinGecko put the tokenized gold category at about $5.9 billion as of October 6, 2026. That is small next to gold ETFs: GLD alone reported about $140.6 billion in net assets on October 5, 2026.
Who regulates PAX Gold?
Paxos issued PAXG under a NYDFS trust charter, and the OCC approved its conversion to a national trust bank on December 12, 2025. Paxos says its US activity is now under OCC supervision.
This explainer is reviewed and updated as the rules and the market change. Last reviewed October 6, 2026. It is educational content and not financial, legal or tax advice.