Gold-Backed Tokens Hit $3.86B as CZ Flags Trust Risks
Gold-pegged tokens are attracting attention in crypto markets even as gold prices hover around $4,100 per ounce. Market capitalization for these digital assets has climbed to $3.86 billion, driven by XAUT ($4,148.53) and Paxos Gold (PAXG), according to CoinGecko data.
However, Binance co-founder and former CEO Changpeng Zhao (CZ) cautioned that these tokens are not “on-chain” gold. “Tokenizing gold essentially means trusting a third party to deliver the metal at some future date, possibly decades from now, even under uncertain conditions,” he wrote on X.
The reliance on centralized issuers echoes concerns seen with stablecoins, which may deviate from their pegs in times of market stress. For example, during a recent $500 billion crypto sell-off, Ethena’s USDe fell to $0.65 on Binance, whereas USDC and USDT remained near $1.
Despite their appeal as a hedge, gold tokens carry trust-based risks that have limited wider adoption. “It’s a ‘trust me bro’ token,” CZ added, noting why no gold-backed coin has achieved mainstream traction.
Tether Gold, the largest gold token, holds a market cap of $2.1 billion—modest compared with USDT’s $183 billion—highlighting the niche position of tokenized gold in the crypto ecosystem.
