Stablecoin-issuer Tether launched a gold-backed cryptocurrency, Tether Gold, on Thursday.
The XAUT tokens are backed by one fine troy ounce of gold stored in a secure Swiss facility by TG Commodities Ltd., the company said in a statement. Gold currently sells at about $1,563 per fine troy ounce.
“There is growing demand for digital exposure to physical gold, making the launch of Tether Gold a timely innovation in the crypto ecosystem,” Paolo Ardoino, CTO of Tether, said in a statement. “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.”
Gold was the basis of a pre-Bitcoin digital currency, E-gold, which ended with a forced redemption in 2009. Founder Douglas Jackson pleaded guilty to money laundering and running an unlicensed money transmitter service. The latter is one of the charges faced by Reggie Fowler, who allegedly looted Tether’s sister company, cryptocurrency exchange Bitfinex.
The XAUT tokens are available as ERC-20 tokens on the Ethereum blockchain or TRC20 tokens on the Tron blockchain. Tether does not charge any custody fees, said the company, which called tether gold tokens “the best way to hold gold” today.
Tether has long faced questions about its claim that its tether (USDT) stablecoin tokens are really backed one-to-one by U.S. dollars. The company is also fighting a fraud investigation by New York Attorney General Letitia James, and a $1.4 trillion (yes, with a “t”) class action lawsuit that blames the company for the entirety of the “crypto winter” losses.
While tether gold tokens can, technically, be redeemed for gold bullion, there are two big catches: the tokens can only be redeemed as full bars, and only in Switzerland. Alternately, TG Commodities will sell the gold and transmit the fiat funds, for a fee.
A full bar is 430 ounces, Tether said. That’s about $672,000 at current prices.