Tokenized gold and commodities

A gold token's value rests on the metal in the vault, not on the blockchain it runs on. Pax Gold (PAXG), issued by Paxos, and Tether Gold (XAUT) both represent direct ownership of gold bars stored in professional vaults and certified to the London Bullion Market Association standard; together they make up most of a tokenized gold market worth several billion dollars. Each token holder can typically redeem for physical gold above a minimum size, or sell the token on the open market, and each issuer publishes audits or attestations of the bars behind its tokens.

The gap between a gold token and an unbacked crypto asset is custody. The World Gold Council and Boston Consulting Group proposed a "Gold as a Service" framework in Digital Gold: The Case for a Shared Infrastructure to standardize custody, reconciliation, compliance and redemption across digital gold products. Their reason: without common terms for backing, custody, audit and redemption, a buyer cannot treat two gold tokens as interchangeable, and the tokens cannot move freely between venues.

Paxos stores the gold behind PAXG in Brink's vaults in London, and Tether states that XAUT's gold sits in a Switzerland-based vault, both cited by the issuers as the reason a holder can trust the token without visiting the vault. A buyer who wants to check this for themselves looks at the issuer's own attestation reports and, where available, the specific bar list an issuer publishes, instead of taking the token's name as proof of the metal behind it.

The same structure, a token redeemable for a stored physical unit, applies to other commodities: tokenized silver, oil and carbon credits all exist in smaller markets than gold. J.P. Morgan has explored tokenized carbon credits as a way to make voluntary carbon markets more liquid and easier to trace back to the underlying project. A commodity token differs from a tokenized security such as a tokenized bond, because there is no issuer with a credit rating behind it, only the custodian holding the physical asset.

A gold token usually tracks the spot gold price closely, but not perfectly. Trading volume for tokenized gold reached tens of billions of dollars in early 2026, concentrated in a handful of tokens, and a token with thin trading on a given exchange can trade at a small premium or discount to spot gold until an arbitrageur redeems or mints new tokens to close the gap. That redemption mechanism, not the blockchain itself, is what keeps the token price anchored to the metal; a token without a credible redemption process is closer to a bet on the issuer's promise than to gold ownership.

Most tokenized gold trades on crypto exchanges and DeFi platforms, not on a regulated securities venue. In Germany, Boerse Stuttgart Digital holds a BaFin crypto custodian license, part of the infrastructure a bank or broker in Germany would use to custody a commodity-backed token for clients instead of leaving it on an offshore exchange. A German or Austrian investor buying a gold token through a regulated custodian gets the same underlying protections BaFin or the FMA require of any crypto custody business, covered in more depth on the crypto custody hub answer.

Finance Loop is the meeting place for people who build and custody tokenized real-world assets, gold and other commodities among them. CoreLedger, a Finance Loop partner since December 2024, builds asset tokenization technology and has covered how to tokenize gold and real estate at a real-world asset evening at TechQuartier in Frankfurt, alongside Finemetal and S-Pro.

Tokenized gold is a token backed by physical gold held in a vault, usually redeemable for the metal or its cash value above a set size. Pax Gold and Tether Gold are the two largest, both linked to LBMA-certified bars.

No. The token holder depends on the issuer's custody and audit process instead of holding the metal directly. A holder who wants the physical bar has to redeem the token, which usually carries a minimum size and a fee, so most token holders trade exposure to the gold price and never take delivery.

Yes. Silver, oil and carbon credits already exist as tokens, each backed by a stored or certified unit of the underlying commodity. The market for these is smaller than for gold, and liquidity varies a great deal by commodity and issuer.