Tether stores 80 tons of gold in a private Swiss vault to reduce custody costs and control its reserve assets.
Gold now makes up 5% of Tether reserves as it expands its token Tether Gold backed by physical bullion.
Regulatory changes in the US and Europe may force Tether to reduce gold holdings in its stablecoin reserve portfolio.
Tether, the world’s largest stablecoin issuer, has built a private gold vault in Switzerland to store $8 billion in physical gold. This vault is fully owned by the company and holds nearly 80 metric tons of gold.
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The development reflects Tether’s strategy to diversify its reserve holdings while reducing third-party custody costs.
Gold Becomes a Strategic Reserve Asset
Tether’s gold stockpile represents about 5% of its $112 billion reserve portfolio. The gold is held directly in a vault that is not managed by any external custodian. By keeping full control of the facility, Tether aims to cut down on the fees usually charged by vault operators. Such fees can reach 50 basis points annually, especially when managing large volumes.
The vault supports Tether’s gold-backed token, Tether Gold (XAUT), which is currently valued at around $819 million. This token is backed by approximately 7.7 metric tons of gold. The company believes that direct control over the vault will make scaling the token more cost-efficient in the future.
Rising Demand for Gold Spurs Expansion
Global interest in gold is rising again. This year, central banks have acquired a lot of gold, particularly those of the BRICS countries. Meanwhile, gold-based exchange-traded funds (ETF) are rising in price again as investors are going back to these investments.
Tether believes that this adjustment is indicative of the fact that gold is a good hedge. The company's gold holdings now match those of UBS Group in terms of precious metals exposure. This move positions Tether alongside large financial institutions in terms of reserve strategies.
Regulatory Pressure May Limit Gold Holdings
The company is subject to regulatory uncertainties even as it continues to increase its gold reserves. The European Union and the United States are looking into new rules by lawmakers. The GENIUS Act passed the Senate in the United States recently and is awaiting House review. Under these proposals, stablecoin issuers would be required to have only cash and short-term government bonds in reserve.
In case these regulations are approved into law, Tether might have to reduce or completely eliminate its gold reserves. That could affect both its reserve composition and the future of the XAUT token.
Stablecoin Growth Continues
Despite regulatory questions, Tether maintains a dominant position in the stablecoin market. Its USDT token recently reached a $159 billion market cap. That gives it a 62.43% share of the global stablecoin sector, now valued at $255 billion.
Tether’s investment in physical gold adds a traditional asset layer to its digital offerings. This mix of blockchain and bullion reflects a new direction in stablecoin reserve management.