Tether, the issuer of the popular stablecoin USDT, has now launched a new type of commodity-backed token pegged to gold. At the time of this writing, the new token will be issued on the networks of Ethereum and Tron.
Tether Launches Tether Gold (XAUt)
According to a recent announcement, Tether, the company behind the most widely used stablecoin, USDT, has launched a new digital asset. Ticked XAUt, the token represents one troy fine ounce of gold on a London Good Delivery bar.
Holders will be able to obtain undivided ownership rights to gold on the specified gold bars. The gold which is allocated will be identifiable with a unique serial number, weight, and purity. Per the announcement, XAUt holders will be allowed to check the details of the gold bars associated with their addresses through a look-up website, at any time.
Moreover, the XAUt token will be available as an ERC-20 token on the network of Ethereum, and as a TRC20 token on the blockchain of TRON.
Tether Gold, the digital asset pegged to physical gold is officially live!
— tethergold (@tethergold) January 23, 2020
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High Barrier To Entry
While the idea of owning gold-backed tokens might sound appealing, the barrier to entry for XAUt seems a bit high. In order to purchase Tether Gold, users will have to get a verified account with the company behind the token – TG Commodities Limited.
There is a minimum purchase amount equal to 50 XAUt which is, essentially, 50 fine troy ounces. At recent prices, this is roughly about $75,000. Moreover, users will only be able to purchase it with US Dollars. There is no custody fee, but XAUt owners will incur a one-time 25 basis point fee when purchasing the tokens from the company.
In addition, should a user want to redeem his token for the physical gold, he must have at least one full bar of gold worth of tokens in order to request the redemption. If he doesn’t have enough tokens, the company states that they “usually” request a deposit at least 430 tokens in order to ensure that a full bar of gold is matched.
In terms of trading, the announcement states that XAUt tokens will be tradable on exchanges. They can be fractioned down to whatever portions the exchange permits.
According to the website, XAUt tokens will be made available on Bitfinex and other cryptocurrency exchanges, though the list is to be updated.