Tokenized gold reaches $4 billion as xAUt, PAXG, and VNXAU chart different paths
Unlock the Blockchain Gold Rush: xAUt conquers chains, PAXG reigns with ironclad regs, VNXAU opens doors for everyday investors. Dive into digital gold ownership, vault security, and DeFi thrills!
Physical gold ownership has been reinvented on the blockchain. The tokenized gold market exploded 177% in 2025 to reach approximately $4.4 billion, with trading volume surging 1,550% year-over-year to $178 billion. This remarkable growth has positioned tokenized gold as the second-largest gold investment product globally by trading volume, trailing only SPDR Gold Shares (GLD). Three tokens dominate this market with fundamentally different approaches: Tether Gold (xAUt) leads with aggressive expansion, Pax Gold (PAXG) offers the strongest regulatory credentials, and VNX Gold (VNXAU) provides a European-regulated alternative with gram-denominated accessibility.
Each token represents ownership of allocated physical gold stored in professional vaults—unlike gold ETFs, where retail investors own shares of a fund rather than specific bars. This structural difference enables 24/7 trading, fractional ownership to six decimal places, and integration with decentralized finance protocols. However, the three solutions differ substantially in regulatory positioning, fee structures, custody arrangements, and target markets.
xAUt commands market leadership through Tether's infrastructure
Tether Gold has emerged as the dominant tokenized gold product, controlling approximately 50-55% market share with a market capitalization exceeding $2.1 billion as of January 2026. Each xAUt token represents ownership of one troy ounce of LBMA Good Delivery gold stored in Swiss vaults, with over 7.66 tons (375,572+ ounces) verified as of Q3 2025.
The token operates as an ERC-20 on Ethereum and TRC-20 on TRON, with recent expansion to TON, Solana, Polygon, and the Stable blockchain through LayerZero's omnichain technology. This cross-chain infrastructure, branded as XAUT0, has processed over $25-50 billion in transfers since January 2025, making xAUt the most accessible tokenized gold across blockchain ecosystems. Tether introduced a new "Scudo" unit in January 2026 representing 0.001 troy ounce to enable microtransactions.
Custody arrangements place xAUt's gold in Tether's own Swiss vault facility, with the company reporting total gold holdings of approximately 116 tons ($8+ billion)—comparable to Hungary's national reserves. BDO Italia S.p.A. conducts quarterly attestations under ISAE 3000 Revised standards, though critics note these are point-in-time attestations rather than continuous audits. Token holders can verify their individual bar allocation via serial number lookup at gold.tether.to.
The regulatory picture shifted significantly when TG Commodities relocated from the British Virgin Islands to El Salvador in January 2025, obtaining licenses as a Stablecoin Issuer and Digital Asset Service Provider under El Salvador's Digital Asset Issuance Law. The company also maintains U.S. Money Services Business registration with FinCEN, though U.S. persons cannot purchase or redeem through primary markets. EU operations face challenges under MiCA's 60% European bank reserve requirements.
Fees remain competitive: 0.25% one-time creation and redemption fees with no ongoing custody costs passed to holders. Primary market access requires a minimum of 50 xAUt (~$230,000), while physical redemption requires 430 xAUt (one London Good Delivery bar) with Swiss delivery. Secondary market trading on Bybit, OKX, Gate.io, and Bitfinex allows fractional purchases with no minimum.
DeFi integration continues expanding, with an active Aave V3 governance proposal submitted in June 2025 and Uniswap V3 pools generating approximately 22% APY. Tether's Alloy platform, launched in June 2024, enables xAUt holders to mint aUSDT synthetic dollars against their gold holdings.
PAXG offers the strongest regulatory foundation
Pax Gold distinguishes itself through regulatory positioning that no competitor matches. Issued by Paxos Trust Company, PAXG was the first gold-backed virtual currency authorized by NYDFS in September 2019. In December 2025, Paxos converted its state charter to federal oversight, receiving OCC (Office of the Comptroller of the Currency) approval as a national trust—making PAXG the only gold-backed digital asset issued under federal U.S. regulatory supervision.
Market capitalization stands at approximately $1.75-1.88 billion, representing 40-45% of the tokenized gold market. Each token equals one troy ounce of LBMA Good Delivery gold stored at Brink's London vaults, with approximately 380,000-387,000 tokens in circulation held by 89,272+ addresses.
Unlike xAUt's quarterly schedule, PAXG provides monthly attestations now conducted by KPMG LLP (upgraded from Withum in February 2025) under AICPA examination standards. A distinctive transparency feature allows any holder to verify their specific bar allocation by entering their Ethereum wallet address at Paxos.com, returning serial numbers, weight, and purity for their allocated gold.
The token operates exclusively as an ERC-20 on Ethereum—notably more limited than xAUt's multi-chain presence. Paxos has indicated capability to launch on other blockchains but has not executed cross-chain expansion, focusing instead on regulatory compliance and institutional credibility.
Fees are currently highly competitive due to a promotional waiver on creation fees through March 31, 2026. Standard tiered fees range from 0.03-1% depending on transaction size, with large volumes (1000+ tokens) as low as 0.0125%. Storage and custody fees are zero, with no on-chain transfer fees beyond Ethereum gas. However, Paxos reserves the right to implement storage fees with 30-day notice.
The company's regulatory journey hasn't been frictionless. In August 2025, Paxos paid a $48.5 million settlement to NYDFS ($26.5 million penalty plus $22 million compliance investments) for AML deficiencies related to its former Binance partnership during 2018-2023. Notably, the SEC closed its investigation into Paxos in July 2024 with no charges filed.
DeFi integration positions PAXG as collateral across multiple protocols. MakerDAO accepts PAXG for minting DAI, and active Aave V3 governance proposals seek to add PAXG to the main instance with $25,000 in lending incentives. Uniswap hosts approximately $20.29 million in PAXG/WETH liquidity, with pools ranking among the top 5 yield opportunities at approximately 16% APR.
Paxos brings substantial institutional backing: $535-540 million raised across seven funding rounds at a $2.4 billion valuation, with investors including PayPal Ventures, Founders Fund, Bank of America, Mithril Capital, and Coinbase Ventures. Enterprise partners span PayPal, Mastercard, Interactive Brokers, and Revolut.
VNXAU pioneers gram-denominated European access
VNX Gold offers a fundamentally different value proposition: one token equals one gram of gold rather than one troy ounce, dramatically lowering the entry barrier. With approximately $4 million market capitalization and only 29,000 tokens in circulation, VNXAU represents a fraction of its competitors' scale but brings unique advantages for European investors.
The token operates under Liechtenstein's Blockchain Act (TVTG), registered with the Financial Market Authority (FMA) as a TT Services Provider. This European regulatory framework provides legal clarity unavailable in many jurisdictions, with Liechtenstein's EEA membership enabling access across European markets.
Physical gold is stored at OZL Offenes Zollager—described as "Liechtenstein's Fort Knox"—in segregated storage with LBMA Good Delivery certification. This custodian arrangement provides asset protection if VNX faces financial difficulties, as gold is held separately from company assets. Full insurance covers theft, damage, and loss.
Multi-chain deployment from inception distinguishes VNXAU architecturally. The token operates across seven-plus blockchains: Ethereum, Polygon, Solana, Avalanche, Tezos, Stellar, and Base (launched September 2025 as the first gold-backed token on Coinbase's L2). This breadth exceeds even xAUt's cross-chain presence.
Fee structure differs significantly from competitors: 2.5% buy and sell fees plus 0.15% transfer fees—substantially higher than PAXG and xAUt's sub-1% creation costs. However, storage and management fees are zero.
Physical redemption begins at 1 kilogram (1,000 VNXAU)—approximately $89,000 at current gold prices—compared to 430 troy ounces (~$2 million) for xAUt and PAXG. Holders can collect directly from the Liechtenstein vault or arrange worldwide delivery.
Trading liquidity remains the primary limitation. Daily volume averages $28,000-100,000 across LBank, EMIREX, Bitget, and DEXs including Raydium and Orca. Only 1,343 unique wallets hold VNXAU across all chains, compared to approximately 11,800 xAUt holders and 89,000+ PAXG addresses.
Leadership brings traditional finance credentials: founder Alexander Tkachenko holds MBAs from London Business School and Columbia, serves on the executive council of Luxembourg Banking Association's Digital Banking cluster, and previously managed the 2be.lu venture capital fund. The company maintains partnerships with University of Luxembourg's security research center and Sumsub for compliance infrastructure.
Comparative analysis reveals distinct positioning strategies
The three tokens segment the market along regulatory rigor, accessibility, and ecosystem strategy dimensions.
Regulatory hierarchy favors PAXG decisively. Federal OCC oversight, monthly KPMG attestations, and explicit NYDFS authorization create an institutional-grade compliance posture unmatched by competitors. xAUt's El Salvador relocation and VNXAU's Liechtenstein framework provide legitimate regulatory homes but lack the credibility of U.S. federal banking supervision for institutional allocators.
Fee economics favor xAUt and PAXG for larger positions. VNXAU's 2.5% round-trip fees make it expensive for active trading, though zero custody fees mean long-term holders face similar carrying costs across all three. PAXG's current fee waiver creates temporary advantage through March 2026.
Accessibility varies by investor profile. VNXAU's gram denomination and €135 minimum makes tokenized gold accessible to small investors, while xAUt and PAXG's troy ounce basis requires approximately $4,800 per token. However, secondary market fractional trading enables micro-purchases of all three.
Cross-chain presence favors xAUt and VNXAU. PAXG's Ethereum-only limitation constrains DeFi composability and increases gas costs, while xAUt's LayerZero integration and VNXAU's native multi-chain deployment offer flexibility across Solana, Polygon, TON, and emerging ecosystems.
Liquidity concentrates in the leaders. Combined xAUt and PAXG trading volume exceeds 97% of the tokenized gold market. VNXAU's $28,000 daily volume versus xAUt's $100+ million creates meaningful execution risk for larger positions.
| Attribute | xAUt | PAXG | VNXAU |
|---|---|---|---|
| Market cap | ~$2.1B | ~$1.8B | ~$4M |
| Unit size | 1 troy oz | 1 troy oz | 1 gram |
| Jurisdiction | El Salvador | USA (OCC) | Liechtenstein |
| Custody location | Switzerland | London | Liechtenstein |
| Auditor | BDO Italia | KPMG | Areva General |
| Audit frequency | Quarterly | Monthly | Regular |
| Creation fee | 0.25% | 0-1% tiered | 2.5% |
| Physical redemption | 430 oz (~$2M) | 430 oz (~$2M) | 1 kg (~$89K) |
| Blockchains | 6+ | Ethereum only | 7+ |
Tokenized gold disrupts traditional gold investment economics
Compared to gold ETFs, tokenized gold eliminates annual expense ratios while adding 24/7 trading and DeFi utility. GLD charges 0.40% annually, IAU charges 0.25%, while PAXG and xAUt charge zero ongoing fees. Over 20 years, a $100,000 GLD position incurs approximately $8,000 in fees versus minimal network costs for tokenized alternatives.
Settlement accelerates from T+2 days to minutes. Trading extends from market hours to around-the-clock availability. Minimum investment drops from ~$245 (one GLD share) to fractions of a penny. Physical redemption becomes available for retail holders—albeit at high minimums—whereas ETF holders cannot redeem gold directly.
The tradeoff involves counterparty risk to token issuers, smart contract vulnerabilities, regulatory uncertainty in some jurisdictions, and lower liquidity than major ETFs. GLD holds $78 billion in assets versus tokenized gold's entire $4 billion market, creating meaningful depth differences for institutional-size trades.
However, the growth trajectory suggests convergence. Tokenized gold trading volume now exceeds all gold ETFs except GLD, having grown 1,550% in 2025 versus 100-150% for traditional products. New institutional infrastructure—including Tether's $200 million Antalpha partnership for gold-backed lending and HSBC's institutional gold token—signals accelerating mainstream adoption.
Market outlook and emerging developments
The tokenized gold market's momentum reflects both gold's strong performance (up 75% year-over-year to ~$4,835/oz as of January 2026) and structural advantages driving adoption. Key developments shaping the near-term include:
Institutional infrastructure expansion through Tether's planned acquisition of 100+ additional tonnes and partnerships for gold-backed lending services in Singapore and Zurich. PAXG's federal regulatory status positions it for institutional adoption under the GENIUS Act framework passed in July 2025.
DeFi integration deepening with active Aave V3 proposals for both xAUt and PAXG, expanding collateral utility beyond current MakerDAO and Uniswap deployments. Cross-chain bridges continue reducing fragmentation.
Regulatory clarity emerging across jurisdictions: UAE's VARA framework now includes specific Asset-Referenced Virtual Assets categories, Singapore has pioneered tokenized settlement infrastructure, and the EU's MiCA implementation creates compliance pathways for European operators.
Competition intensifying from Kinesis Gold (13,750% volume increase), HSBC Gold Token for institutions, and regional players like Comtech Gold targeting Shariah-compliant markets. However, xAUt and PAXG's combined 95%+ market share appears durable given network effects and liquidity concentration.
The core investment thesis remains consistent across all three tokens: allocated physical gold ownership with blockchain-native transferability, eliminating annual custody fees while enabling programmable finance applications impossible with physical bars or ETF shares. The differentiation lies in regulatory comfort, cost structure, and accessibility preferences—making each token suited to different investor profiles rather than competing for identical use cases.
Sagix
Sagix
Legal disclaimers and disclosures
Educational purpose only: This content is provided exclusively for educational and research purposes. It should not be construed as investment advice, financial planning guidance, or recommendations to buy, sell, or hold any cryptocurrency or token. Historical patterns and comparative analysis provide context for learning but do not predict future performance or outcomes.
AI-assisted research disclosure: This analysis was researched and written with substantial assistance from artificial intelligence technology (Claude, Anthropic). While extensive efforts were made to verify all claims and data against authoritative sources including the Frankencoin documentation, academic papers, and security audits, readers should independently verify any information before relying on it for investment or other decisions.
Accuracy and liability limitations: While extensive effort has been made to ensure accuracy through authoritative sources, the authors make no warranties about completeness, accuracy, or currency of information. DeFi protocols evolve rapidly, and information may become outdated. Statistics, yields, and system parameters referenced may change without notice.
Liability protections: The authors, publishers, and Sagix Apothecary assume no responsibility for errors, omissions, or consequences arising from the use of this information. Users assume full responsibility for any decisions or actions taken based on this content.
Investment risk warning: Cryptocurrency investments carry substantial risk of loss. Stablecoins, despite their name, can lose their peg and experience significant value fluctuations. DeFi protocols face smart contract risks, economic attack risks, and regulatory risks. Past stability does not guarantee future stability. You could lose your entire investment.
No professional relationship: This content does not create any professional, advisory, fiduciary, or client relationship between the reader and Sagix Apothecary. Readers seeking financial, investment, or legal guidance should consult qualified professionals licensed in their jurisdiction.
Conflict disclosure: Sagix Apothecary and its affiliates may hold positions in cryptocurrencies and tokens discussed in this analysis. This potential conflict should be considered when evaluating the information presented.
Source verification: Source verification: Data and claims in this article draw from official issuer sites (gold.tether.to, paxos.com, vnx.li), market data providers (CoinGecko, DeFiLlama), and third-party sources including CoinDesk and Kitco.
Publication information:
- Last updated: January 2026
- Publisher: Sagix Apothecary - The Genesis Address LLC
- Series: Protocol Analysis
