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

PAX Gold (PAXG) has surpassed a $2.01–$2.03 billion market cap by tokenizing physical gold on the Ethereum blockchain. PAXG offers advantages such as fractional ownership, 24/7 liquidity, and DeFi integration, making it a preferred option for both retail and institutional investors according to market analysis. Tokenized gold trading volumes in 2025 exceeded $178 billion, surpassing most major gold ETFs, reflecting growing institutional and retail demand for fractional and accessible gold exposure during periods of geopolitical and macroeconomic uncertainty.

PAX Gold (PAXG) tokenizes one troy ounce of physical gold stored in London vaults and backed by allocated bars with specific serial numbers as reported. This allows investors to own and trade gold without the logistical challenges of physical storage and verification. Each token represents a real, high-purity gold bar with auditable backing, making PAXG a transparent and secure option for digital gold investment according to PAXG documentation.

The token's appeal lies in its 24/7 trading capabilities and DeFi compatibility, enabling use as collateral in decentralized finance platforms. This integration into DeFi ecosystems expands the token's utility beyond a mere store of value, aligning with the growing demand for onchain commodities as noted in industry reports. Paxos Trust Company, the issuer of PAXG, is a regulated national trust bank under the OCC, with monthly audits confirming a 1:1 backing of tokens by physical gold according to regulatory filings. This regulatory compliance enhances trust and transparency, attracting both traditional and crypto-native investors.

Gold prices have surged to record highs amid global economic turbulence, with Bitget's tokenised gold trading volume experiencing a 4,900% increase. Gracy Chen, CEO of Bitget, attributes this to gold's long-standing role as a macro hedge and its combination with crypto-style accessibility. She explains that tokenised gold allows users to react in real time to market uncertainty, without waiting for traditional market hours or navigating traditional brokers as stated in an interview. Tokenised gold is seen as a gateway for crypto users to enter real-world assets, with total value locked (TVL) in tokenised gold jumping from $1 billion to over $4 billion globally in 2025.

Why Is Tokenized Gold Gaining Popularity Now?

Tokenized gold is gaining popularity due to macroeconomic uncertainty and gold's traditional safe-haven appeal. Investors are increasingly drawn to the benefits of tokenization, including 24/7 liquidity, fractional ownership, and DeFi integration according to market research. PAXG's ability to tokenize physical gold on the Ethereum blockchain allows for instant transfers and real-time verification, offering an alternative to traditional gold ETFs as detailed in industry analysis. This innovation has made gold more accessible to a broader investor base, especially those seeking digital and onchain solutions for asset allocation according to financial reports.

The surge in demand for tokenized gold is also driven by the rising open interest in PAXG, which has surpassed $80M, indicating strong adoption of blockchain-based real-world assets. This trend is further supported by the growing TVL in tokenized gold, which has increased to over $4 billion globally. As gold prices continue to set records, tokenized gold is becoming a preferred choice for investors looking to hedge against inflation and economic volatility.

What Are the Risks and Limitations of Tokenized Gold?

While tokenized gold offers several advantages, it also comes with risks and limitations that investors should consider. One of the primary concerns is centralized custody, as tokenized gold is backed by physical gold stored in allocated vaults managed by regulated entities according to industry analysis. This means that investors are reliant on the security and integrity of these custodians, which can pose risks in the event of regulatory scrutiny or operational failures as noted in financial reports.

Another limitation is the potential for technical vulnerabilities in decentralized governance models, which can affect the stability and reliability of tokenized gold platforms according to security experts. Additionally, there is a risk of de-pegging from physical gold, which could impact the value of tokenized gold tokens as reported in market analysis. These risks highlight the importance of due diligence and understanding the underlying mechanisms of tokenized gold before investing.

What Is the Future Outlook for Tokenized Gold?

The future outlook for tokenized gold appears promising, with growing institutional and retail demand for fractional and accessible gold exposure during periods of geopolitical and macroeconomic uncertainty according to market forecasts. As tokenized gold continues to gain traction, it is expected to play a significant role in bridging the gap between traditional finance and the crypto market as stated by industry analysts. This trend is supported by the increasing adoption of tokenized gold in DeFi ecosystems, where it is being used as collateral in liquidity pools and for collateralized lending according to DeFi reports.

The integration of tokenized gold into DeFi platforms is also expected to expand its utility beyond a store of value, enabling new use cases such as yield generation and automated hedging strategies according to market analysis. As the market for tokenized gold continues to evolve, it is likely to see further innovation and adoption, driven by the growing demand for onchain commodities and the need for more efficient and transparent investment solutions as projected by financial experts.