Investors chase yield as tokenized gold and crypto deliver more promise than profit

Investors seeking yield from alternative assets continue to face underwhelming returns, with recent developments in gold-backed tokenization and cryptocurrency adoption failing to deliver the expected performance. SmartGold, a gold-backed individual retirement account (IRA) provider, is partnering with tokenization platform Chintai Nexus to tokenize $1.6 billion in vaulted gold, enabling investors to utilize the digital tokens as collateral across DeFi lending protocols. This move could offer investors a new avenue for liquidity while maintaining the tax-deferred status of their self-directed IRAs. The initiative aligns with a growing trend in tokenized gold, exemplified by Tether Gold, which has surged to $1.3 billion in value this year. However, the practical returns from such strategies remain unproven, and the complexity of leveraging tokenized assets introduces additional risks for investors seeking stable yield.

Self-directed IRAs, which make up 2% to 5% of the $10.8 trillion in U.S. IRA assets, provide a broader range of investment options compared to traditional IRAs, including real estate, private equity, and now, tokenized gold. The tokenization process allows investors to store physical bullion in a SmartGold IRA, after which Chintai issues corresponding digital tokens. These tokens can be used as collateral on platforms like Morpho and Kamino to access U.S. dollar liquidity, which can then be reinvested. Despite these innovations, the returns from such strategies have not yet demonstrated consistent performance. Investors are still weighing the balance between liquidity, asset preservation, and yield generation in an environment where traditional financial tools also remain underperforming.

Meanwhile, the broader market for gold has seen significant movement, with Comex gold futures reaching a record high of $3,557 per troy ounce. This 34% year-to-date gain is attributed to geopolitical uncertainties, persistent inflation, and central bank demand. However, the same factors that have driven gold upward—such as the perceived instability of the U.S. dollar and Federal Reserve policy—have also created a landscape of uncertainty for investors. The prospect of rate cuts in September, as suggested by Fed Chair Jerome Powell at the Jackson Hole symposium, has introduced further volatility into the market, complicating the outlook for yield-seeking investors.

The U.S. has also seen a rise in crypto adoption, climbing to second place in the Chainalysis 2025 Global Crypto Adoption Index, driven by regulatory clarity around Bitcoin ETFs and stablecoins. Institutional demand has surged as a result, with North America experiencing 49% growth in crypto adoption compared to 42% the previous year. Despite this progress, the practical yield from crypto investments remains elusive for many. While institutional investors are capitalizing on favorable regulatory environments, retail investors continue to face challenges in generating consistent returns from either tokenized assets or traditional crypto holdings.

India, which retained its top position in the Chainalysis index for the third consecutive year, has demonstrated robust grassroots crypto adoption driven by real-world needs like remittances and financial inclusion. Despite restrictive regulations, the APAC region, led by India, Pakistan, and Vietnam, saw a 69% year-on-year increase in crypto transaction volumes to $2.36 trillion. This highlights how crypto adoption is being shaped by utility rather than speculation in many emerging markets, but the yield-focused investor remains unimpressed by the returns generated from these activities.

As yield products continue to disappoint, investors are left navigating a landscape where innovation in tokenization and crypto adoption is outpacing tangible returns. The rise of tokenized gold and increased institutional interest in crypto may signal a shift toward more sophisticated investment tools, but the market is still far from delivering the consistent, high-yield outcomes many investors had hoped for.

Source:

[1] SmartGold, Chintai to Tokenize $1.6B in IRA Gold (https://cointelegraph.com/news/smartgold-chintai-ira-gold-tokenization)

[2] US Crypto Adoption on the Rise Following 'Regulatory ... (https://finance.yahoo.com/news/us-crypto-adoption-rise-following-120103061.html)