PAXG Surpasses $2 Billion Market Cap as Tokenized Gold Demand Surges

PAX Gold (PAXG) has emerged as a prominent tokenized asset in 2026, reaching a $2 billion market cap as demand for blockchain-backed gold continues to surge. The token allows investors to own and trade verified gold-backed tokens on the Ethereum blockchain, enabling fractional ownership and instant transfers. This format eliminates the need for traditional storage and verification, offering a transparent and auditable alternative to physical bullion.

The surge in PAXG's popularity is driven by broader macroeconomic uncertainty and the appeal of gold as a safe-haven asset. Tokenized gold trading volumes in 2025 surpassed those of most major gold ETFs, with PAXG and Tether Gold (XAUT) leading the market. Investors, both institutional and retail, have gravitated toward PAXG due to its 24/7 trading, instant settlement, and collateral capabilities on DeFi platforms.

PAXG's market growth is also supported by its regulatory compliance and transparency. The token is backed by one troy ounce of London Good Delivery gold stored in LBMA-certified vaults, with specific serial numbers that token holders can verify. Smart contracts on the Ethereum blockchain ensure that new PAXG tokens are only created when physical gold is secured and allocated, preventing over-issuance and ensuring asset-backed stability.

Why Is PAXG Gaining Momentum in 2026?

PAXG's rise reflects a broader trend of tokenized assets replacing traditional investment vehicles in a digital economy. With gold prices reaching record highs in 2026 and global fiscal deficits growing, investors are seeking accessible, liquid, and verifiable ways to gain exposure to precious metals. Tokenized gold addresses the limitations of physical bullion—such as high minimums and storage costs—while offering on-chain transparency and ease of use.

The token's appeal is further amplified by its integration into DeFi ecosystems, where it can be used as collateral for loans and yield-generating activities. This dual utility—as a store of value and a liquidity provider—has attracted a new generation of investors to the asset class.

What Risks and Challenges Remain for PAXG?

Despite its growth, PAXG faces challenges related to custodial and regulatory risks. While the token is backed by physical gold stored in vaults, investors must still rely on the custodian, Paxos, to manage those assets. Regulatory scrutiny in the U.S. and other jurisdictions could influence adoption and usage.

Additionally, PAXG has seen friction in its use as collateral for leveraged positions on exchanges like Binance, which have reduced its collateral ratio. These changes can affect liquidity and leverage strategies for traders. Investors are advised to monitor regulatory developments and custodial practices as the market evolves.