Tether's Gold Gambit: A Digital Central Bank Rises

Stablecoin giant Tether has amassed 116 tonnes of physical gold, a hoard that rivals the reserves of central banks in South Korea, Hungary, and Greece, according to a recent analysis by Jefferies. The investment bank noted that Tether's gold purchases in the last quarter accounted for nearly 2% of global gold demand and 12% of central bank purchases, underscoring its growing influence in the gold market. This aggressive accumulation has tightened short-term supply and driven speculative inflows, with investors speculating that Tether aims to acquire an additional 100 tonnes by 2025. Tether's reported $15 billion profit this year suggests the target is within reach.

Tether's strategy extends beyond direct bullion purchases. The company has invested over $300 million in gold-related ventures, including a 32% stake in Canada's Elemental Altus Royalties and exploratory investments across the gold supply chain. These moves are part of a broader diversification of Tether's reserves, which include U.S. Treasuries and Bitcoin. The stablecoin issuer also backs its gold-backed token, Tether Gold (XAUt), which has seen issuance double in six months, adding $1.1 billion in value since August. XAUt now commands a $2.1 billion market cap, reflecting institutional demand for tokenized gold.

Jefferies argues that Tether's gold strategy could reshape market dynamics. By tokenizing gold, Tether addresses frictions in traditional gold markets, such as the logistical challenges of physical bullion, high fees for ETFs, and roll costs in futures. The firm's approach mirrors central bank functions, including reserve management and liquidity control, while leveraging blockchain technology to enhance accessibility. However, regulatory hurdles loom. The U.S. GENIUS Act, enacted in July 2025, excludes gold from compliant stablecoin reserves, forcing Tether to launch a U.S.-specific stablecoin, USAT, backed solely by Treasuries. This bifurcated strategy aims to balance compliance with its long-term vision of a "borderless central bank" system.

The market impact of Tether's gold purchases is evident. Gold prices surged over 50% in 2025, with analysts attributing a significant portion of the rally to sustained demand from the stablecoin issuer. Tether's vertical integration into gold mining and refining further solidifies its role as a non-traditional market participant, potentially reshaping capital flows in the sector. Competitors, including gold mining companies and traditional gold ETFs, face both opportunities and challenges as Tether's strategy gains traction.

Looking ahead, Tether's gold strategy could redefine stablecoin resilience and asset diversification. While regulatory scrutiny intensifies, the company's dual-track approach-balancing compliance with innovation-positions it to navigate evolving landscapes. Investors will closely watch Tether's future attestation reports, the launch of USAT, and further gold-related investments, which could continue to influence both digital and traditional markets according to market analysis.