Tether defends gold as safe haven amid global uncertainty

Tether has confirmed it’s now holding nearly 80 metric tons of gold, worth around $8 billion, inside a private vault in Switzerland. The vault is fully owned by the company, and the exact location hasn’t been disclosed. Chief Executive Paolo Ardoino told Bloomberg that this decision was about ownership, scale, and cost. The company is based in El Salvador and is best known as the issuer of USDT, the world’s largest stablecoin. Tether now holds $159 billion worth of tokens in circulation, which are backed by various reserves, including US Treasuries and precious metals. Paolo made it clear that the move to physical gold storage is strategic and intended to reduce long-term costs. “If you have your own vault, eventually, with the size, it gets much cheaper to do custody,” he said. Tether expands physical holdings while rules tighten As of March 2025, Tether’s own reports show that nearly 5% of its total reserves are now held in precious metals, with the vast majority being gold. With the value of its bullion holdings now on par with UBS Group AG, one of the few major banks that discloses its precious metal reserves, Tether is pushing into a category usually reserved for nation states and central banks. Allegedly, Tether has established the vault independently, opting not to use third-party custodians like most players in the precious metals industry. “It’s a lot of money to pay 50 basis points,” Paolo said , referencing fees typically charged by vault operators. However, the growing role of stablecoins like USDT has regulators on edge. In both the United States and the European Union, proposed and existing regulations now limit the types of assets that can back fiat-linked digital tokens. Those rules only allow cash and short-term government bonds, not gold. If Tether decides to operate in those markets under official authorization, it would be required to sell off the gold backing USDT to meet compliance standards. That hasn’t stopped the company from pushing forward with another gold-backed asset: XAUT, a separate token issued by Tether that is pegged one-to-one with physical gold. Each coin equals one ounce of the metal and can be redeemed for real gold inside Switzerland. The current total of XAUT in circulation represents about 7.7 tons of gold, or roughly $819 million. That number is still tiny compared to leading gold exchange-traded funds like SPDR Gold Shares, which holds close to 950 tons. Paolo defends gold as safe haven amid global uncertainty Tether’s decision to buy and store this much gold isn’t based on vibes. It’s rooted in what Paolo sees as rising economic instability and a growing distrust in fiat currencies. “Gold, I think should be logically a safer asset than any national currency,” he said. Paolo pointed specifically to the United States’ increasing debt, warning that concerns about the dollar’s long-term strength could push investors toward more tangible alternatives. Gold prices have already surged 25% this year, driven by buyers looking for safety amid geopolitical risks, trade wars, and monetary uncertainty. Central banks in BRICS countries have been adding aggressively to their gold reserves. “Every single central bank in the BRICS countries is buying gold,” Paolo said. “So that is why gold price went up in our opinion.” This is also a play for scale. If Tether’s gold-backed XAUT token expands to $100 billion, the difference between paying standard fees versus owning a vault outright becomes massive. Vault custody rates usually sit around 50 basis points, and at that size, the cost would be in the hundreds of millions. Owning the infrastructure gives Tether total control and dramatically lowers costs over time. But not everyone is comfortable with that. Governments and law enforcement agencies have flagged Tether more than once. The fear is that stablecoins could let massive sums move without oversight, bypassing traditional banking rails altogether. The opacity of reserves has been a long-standing issue. And now, adding gold, an asset that’s harder to track, only makes watchdogs more nervous. Still, Tether isn’t backing off. The company is betting that owning hard assets in a tightly controlled vault gives it more leverage in a world that’s becoming increasingly volatile and less reliant on centralized banking. Whether that bet pays off will depend on how global regulators respond and whether Tether’s user base continues to accept gold as a trustworthy backstop for their tokens. Cryptopolitan Academy: Tired of market swings? Learn how DeFi can help you build steady passive income. Register Now

Source: Cryptopolitan