TBW - Tokenized Gold: a market ready to explode?

Briefly

• Gold jumped more than 50% in 2025
• Tether became one of the world's biggest gold buyers
• Tether (XAUT) and Paxos (PAXG) tokens dominate the tokenised gold market, which is still tiny with around 80,000 holders.
• MKS Pamp, a historic player in gold, is entering tokenisation with a decisive industrial advantage: it produces, stores and certifies the underlying gold itself.
• Tokenised gold could become an ideal collateral for DeFi

Gold had not seen such a boom for almost half a century. By the end of 2025, the yellow metal had surged by more than 50%, surpassing its previous records and attracting new buyers well beyond its traditional circle.

An unexpected new player has invited itself onto the list of the world's biggest buyers: Tether, the issuer of the stablecoin USDT ($185 billion capitalisation).

In the third quarter of 2025, the company became the world's biggest buyer of gold, overtaking the central banks, with around 26 tonnes bought in three months. Why? To bolster the reserves of its USDT stablecoin (part of which is now backed by gold) and to support its XAUT product, a token representing an ounce of metal ($1.5 billion capitalisation for 16,000 holders).

>> Analysis: diving into Tether's diversification strategy

This move changes the dynamic: for the first time, a crypto player is weighing in on the physical gold market.

Benjamin Louvet, head of commodities management at Ofi Invest AM, tempers the systemic importance of this phenomenon: "Tether bought more than the central banks over a quarter, but its total holding remains comparable to that of a modest country like Greece. The real issue is the transparency and auditability of its reserves, and these are terribly lacking in this product."

Tether is in fact conspicuous for the significant opacity of its reserves, and it is not known where its gold is stored (although sources consulted by The Big Whale have mentioned Switzerland).

Benefits of tokenized gold

These digital tokens represent a quantity of gold stored in a vault, the ownership of which is registered on a blockchain. The concept may sound technical, but in reality it is transforming the very way we hold the yellow metal.

Having bullion at home or in a vault always involves storage costs, security constraints and limited liquidity. Reselling physical gold can be time-consuming, sometimes expensive, and rarely instantaneous. Conversely, a token gives you access to gold from as little as a few dozen euros, allows you to sell immediately at any time of day and avoids the logistical problems of storage.

"With DGLD token, you keep the advantages of physical ownership without the drawbacks. Each token represents one ounce stored in Switzerland, and that ounce legally belongs to you. Even if the company disappears, the gold remains yours," insists Kurt Hemecker, CEO of Gold Token SA, a gold tokenisation company acquired in November by Swiss giant MKS Pamp, one of the world's leading gold manufacturers and exchanges, which made him its Head of Digital Assets.

In comparison with ETFs, tokenised gold also profoundly changes the relationship with the metal. Traditional financial products are easy to access, but they remain expensive and above all abstract: the investor has no way of verifying the reality of the gold held by the fund, and the vast majority of these instruments do not allow the metal to be physically delivered.

In contrast, a properly structured token guarantees complete traceability. Some players even go so far as to allow the token to be converted into physical gold, whether it's a single gram or a 12.5-kilo "Good Delivery" bar.

"We deliver from 1 gram up to a Good Delivery bar," points out Kurt Hemecker.

Tokenised gold is not without its limitations, however. Its reliability depends entirely on the solidity of the issuer, the quality of storage, the rigour of audits and the transparency of reserves. The technological risk is never zero: blockchain remains a new infrastructure, and the self-management of private keys exposes people to irreversible errors.

Benjamin Louvet, cautiously, sums up this ambivalence: "Tokenisation offers a more direct form of ownership... but it will remain a peripheral solution until the players prove their industrial seriousness."

Tether, Paxos, MKS Pamp: three very different visions

As opposed to Tether, Paxos represents almost the exact opposite in terms of transparency and its tokenised gold product rivals it in terms of capitalisation ($1.4 billion for 63,000 holders).

Based in the US and operating under strict supervision, the company is known for its rigorous compliance. Its PAXG token has become the market's "institutional" benchmark: a tokenised, regulated, audited asset that complies with US standards.

But Paxos is not a gold player. It does not refine, store itself, transport or produce bullion. Its link to the metal remains indirect, and the company depends on partners for each stage in the chain. This limits its ability to offer more advanced services, such as physical delivery on demand, or fine industrial traceability.

The third family of players (and probably the most structuring) are the historic leaders in the gold market, such as MKS Pamp. For 60 years, the Swiss company has been refining, certifying, storing and distributing the metal for central banks, jewellers and financial institutions.

It is one of the very few refineries in the world capable of producing gold of 99.99% purity and is one of three worldwide authorised by the London Bullion Market Association to assess other refineries. It is in this context that it has relaunched the Gold Token project in 2025.

The company insists on its unique positioning: "This is not a crypto project. It's a gold project backed by a new technology", sums up Kurt Hemecker.

To date, distribution of their Digital Gold (DGLD) is still confidential ($7 million, for around 3,000 holders).

But their model is based on a strong idea: in the long term, only players with deep roots in the metal industry will be credible for tokenising gold. This industrial capacity, absent at Paxos and opaque at Tether, could become a decisive advantage as regulators and institutions take an interest in the market.

The future "super-collateral" of the DeFi?

While exposure to gold on the blockchain is naturally an obvious use case, tokenising it opens up a far more ambitious prospect: that of becoming one of the best collaterals for securing loans or futures markets within decentralised finance.

Today, in DeFi, the king collateral remains stablecoin and large crypto capitalisations (BTC and ETH). But most of these assets are either subject to counterparty risk (stablecoins) or extreme volatility (crypto-assets).

In this context, tokenised gold embodies almost the opposite: an asset that is immense in terms of capitalisation, virtually impossible to manipulate, extremely liquid and historically stable. For a DeFi protocol, being able to rely on collateral that is resistant to systemic shocks would be very useful.

Projects like Morpho, which are looking to attract institutional investors, are starting to take an interest. From the point of view of a fund, company or family office, using tokenised gold as collateral would put a traditionally unproductive asset to work, much more secure than a stablecoin or volatile crypto.

MKS Pamp make it clear: their ambition is to make their token "an alternative to USDC for those who want to protect themselves from debasement".

Except that very large players such as central banks or sovereign wealth funds already generate income from the gold they hold.

"The players who would have the most to gain (central banks, sovereign wealth funds, etc.) already have a gold lending market that allows them to lend their gold and earn a return on it. They don't need blockchain for that", Benjamin Louvet moderates.

"On the other hand, tokenisation may be of interest to more modest investors, who want to combine a quasi-physical holding with an on-chain utility, or even defer taxation. But this will remain, in my view, a peripheral solution, which does not structurally transform the gold market", he insists.

"Nevertheless, it is a subject that is on the rise: the World Gold Council, which acts as a benchmark for the industry, has announced that it is working on a tokenised gold project in partnership with the London Metal Exchange, which shows that the issue is no longer marginal," says Benjamin Louvet.

"But let's make no mistake: these are mainly long-term considerations. The mining industry is very conservative, and tokenisation doesn't change the physical reality of metal: it has to be extracted, purified, stored, audited... It remains a heavy and expensive asset to handle. So yes, it's a subject, but it's not an industrial upheaval for the time being, more a serious experiment that's being closely monitored," concludes the expert.

>> Read Benjamin Louvet's full interview on the state of the gold market

>> Discover our Tokenization Dashboard

>> Briefing - The state of tokenization in Q3 2025

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