Tether puts $23 billion gold stockpile to work

Tether has expanded the use of its $23 billion gold reserves by bringing its tokenized product Tether Gold (XAUT) to crypto lender Ledn.

Ledn said it is adding support for XAUT, alongside bitcoin BTC$60,741.45 and Tether’s stablecoin USDT, with borrowing against XAUT expected later this year.

Tether is attempting to monetize what has become one of the world’s largely privately held gold reserves. The stablecoin company says it holds around $23 billion worth of physical bullion backing XAUT, with each token representing one troy ounce of gold stored in vaults in Switzerland.

Gold-backed lending is traditionally the realm of central banks, major financial institutions and bullion dealers. Tether and Ledn argue that by tokenizing physical gold, the asset can function more like physical bitcoin as digital collateral, unlocking liquidity without having to sell it.

This follows the model Ledn has used for bitcoin-backed loans for several years. Client collateral continues to be held 1:1, without being lent out or used to generate yield, Ledn said, seeking to draw a line between the services it offers and those of its former rivals that went to the wall in the crypto winter of 2022.