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

PAX Gold (PAXG) has exceeded a $2.01–$2.03 billion market cap by tokenizing physical gold on the Ethereum blockchain.

Each PAXG token represents a fine troy ounce of London Good Delivery gold stored in allocated vaults, with monthly audits ensuring 1:1 backing.

Tokenized gold is gaining traction as an accessible and liquid form of gold investment, especially amid macroeconomic uncertainty and the adoption of DeFi solutions.

PAX Gold (PAXG) has surged in popularity as a tokenized gold asset, offering investors a transparent and liquid way to gain exposure to physical gold. The market capitalization of PAXG has surpassed $2.01–$2.03 billion, driven by the increasing adoption of blockchain-based financial instruments. PAXG is backed by one fine troy ounce of London Good Delivery gold stored in allocated vaults, with monthly audits by Paxos Trust Company to ensure 1:1 backing.

The token's compliance-friendly structure and real-time verification make it a preferred choice for both institutional and retail investors. PAXG's ability to be used as collateral in DeFi platforms further enhances its utility beyond a mere store of value. The token's 24/7 liquidity and fractional ownership features are particularly appealing in markets where traditional gold investments have high entry barriers.

Tokenized gold is redefining how investors access and manage gold assets. Unlike traditional gold ETFs or physical bullion, PAXG offers lower entry barriers, greater flexibility, and 24/7 liquidity. This format allows for fractional ownership, making gold accessible to a wider audience.

Why is Tokenized Gold Gaining Traction?

Tokenized gold is gaining traction due to its ability to bridge traditional finance and the crypto ecosystem. PAXG provides 24/7 trading, instant settlement, and DeFi integration, making it a preferred option for investors seeking transparency and liquidity in gold-backed digital assets.

The tokenized gold market has seen significant growth, with the total value locked (TVL) increasing from $1 billion to over $4 billion globally in 2025. This growth indicates strong institutional and retail adoption. PAXG's compliance with NYDFS regulations and monthly third-party audits make it an attractive investment for both retail and institutional investors.

The demand for tokenized gold is also driven by macroeconomic uncertainty and the desire for safe-haven assets. PAXG's ability to hedge against market volatility and provide direct ownership of physical gold through LBMA-certified vaults is a key differentiator.

What are the Challenges and Limitations of Tokenized Gold?

Despite its growth, tokenized gold still faces challenges related to custody verification and settlement under stress scenarios. These operational hurdles are particularly relevant for institutional participants. Another limitation is the absence of yield generation for tokenized gold, unlike yield-bearing tokens from competitors.

PAXG operates under the regulatory oversight of the New York State Department of Financial Services (NYDFS), which adds a layer of trust and transparency. This compliance is a key differentiator compared to other gold-backed tokens or ETFs. Monthly audits by Paxos Trust Company enhance investor confidence by ensuring that each PAXG token is fully backed by physical gold stored in LBMA-certified vaults.

Risks include centralized custody vulnerabilities and sensitivity to interest rates. Investors should consider these limitations while recognizing PAXG's role as a high-liquidity alternative to traditional gold investment. Despite these risks, PAXG's growth reflects a broader trend of tokenized assets becoming core components of diversified portfolios, particularly in emerging markets where traditional gold-linked products are less available.

PAXG exemplifies the growing role of tokenized assets in the evolving digital finance landscape. As tokenized gold gains traction, PAXG plays a key role in bridging traditional and crypto markets, offering a dual utility as a store of value and a DeFi collateral.