Bitcoin is the most prominent cryptocurrency. It is frequently referred to by “digital gold” because of its utility as a store-of-value. However, its rapid price swings in its short history make it difficult for would be investors who are keen to explore digital assets but prefer stability.
The “gold vs. Bitcoin” debate is nearly as old as Bitcoin, with Peter Schiff frequently taking an anti-BTC pro–gold stance. (embed to video)
Despite cryptocurrency’s rising popularity, many potential investors are being discouraged from purchasing or holding digital assets because of its volatile nature.
How about cryptocurrencies that could replicate the price of gold but retain the digital benefits? Imagine if cryptocurrency could be used to replicate the price of gold, but without actually needing to store and protect large bricks of gold.
Gold-backed, also referred to as “gold-pegged”, cryptocurrencies are backed by the physical value of gold. Like stablecoins and cryptocurrencies, most gold-backed cryptocurrency are backed by physical gold.
This guide to gold-backed cryptocurrency explores the most well-known tokens that are gold-backed, as well as who and what the behind them.
Gold-Backed Tokens 101: How Do They Work?
Gold-pegged cryptocurrencies are designed in a similar way to stablecoins, but rather than being backed by fiat are backed by the value of physical gold.
Gold-pegged tokens aim to prevent price fluctuations by tying the derivative asset to a tangible asset. Theoretically, the cumulative price of the tokens shouldn’t be less than the value of the physical assets
The amount of gold used to back a particular gold-pegged cryptocurrency must be held in gold reserves, which are commonly held at banks and other third-party institutions.
Gold-pegged tokens vary in how they’re backed. Some tokens are backed at a 1:1 ratio, where 1 token equals 1 gram of Gold, while others use different ratios.
As the price of gold rises, so does the price of tokens, making them a more stable investment option than other cryptocurrencies.
Most tokens that are gold-backed allow investors to redeem tokens to get gold. This is similar to the way dollar-pegged stablecoins can be traded for $1. 00 equivalent in fiat.
There are many advantages to gold-pegged tokens.
You can own a token with the same value as gold, without needing to physically hold gold.
Gold’s value is less prone to price fluctuations
It’s a more straightforward route into the commodities market
There are however some drawbacks.
Although gold can protect from the downsides, it historically doesn’t carry similar returns to cryptocurrencies as BTC or ETH.
Market growth tends to be slower than other cryptocurrencies.
Digital assets pose new inherent risks that the physical asset doesn’t, and are also without many of the same protections.
Gold-pegged tokens are a steady asset for those seeking stability in their digital portfolio.
To compile our list with the most popular gold-pegged tokens, we assessed the company that made the token, its current market cap and the unique features each project offers.
Perth Mint Gold Token (PMGT)
Perth Mint Gold Token is one of few cryptocurrencies that has been validated by a government. All gold purchased at PMGT can be traded and stored at The Perth Mint, instead of being held in private companies.
The currency is supported by physical gold blocks at a 1:1 ratio and has a market cap of $2,212,088 . Every time a buyer purchases the token, they are issued digital gold certificates. These certificates can be exchanged for gold bullion and delivered to the address.
Investors are not required to pay transaction fees during the transaction. Investors don’t have to pay storage fees or ongoing management fees if they decide not to own the gold.
The token can only be purchased at Independent Reserve, though talks are in place for PMGT to be listed on other exchanges.
Gold Coin – GLC
Gold Coin (GLC) is an ERC-20 coin developed by Digital Gold LTD. This cryptocurrency was created and maintained by volunteers who believe in economic freedom.
It’s backed by a ratio of 1000 GLC per ounce of gold, and has a market cap of $1,807,944. GLC holders have unique access to features like two-minute confirmation speeds. This makes it one of the fastest transactions of all gold-pegged tokens.
GLC offers an exclusive Goldcoin Wallet that can be used to purchase any gold. There are no transaction fees and it is very easy for investors buy and keep their gold.
Gold Coin is available on the following exchanges: CryptoExchange.com and Goldcoin.com; it can be bought with credit and debit cards.
DigixGlobal (DGX)
DigixGlobal is a Singapore-based company that provides gold-pegged DGX tokens. The DGX token is backed on a 1:1 ratio and has a market cap of $1,183,867. Each token is 1 ounce of pure gold.
The gold is held in both Singapore (and Canada) which creates a unique value added to the token. By having storage locations in two places around the globe, the risks associated with only one location can be mitigated.
DigixGlobal charges a 1% fee per exchange and assumes the demurrage (shipping) fee. The only exchange you can currently buy DGX is Coinsquare, where it can be purchased with Bitcoin (BTC) or Ethereum (ETH).
Meld Gold by Algorand (MCAU)
Meld Gold is a stable alternative for altcoins. It makes investing in gold accessible through the Meld Digital Gold Certificates. Each gold certificate is equivalent to 1 gram of physical gold and the market cap is unknown as of April 2022.
The tokens (certificates), are protected on the Algorand Wallet. This makes them accessible to all investors who have a wallet. Meld created a partnership program in order to bring together leaders from the financial, technology and gold sectors to brainstorm the future of the token.
Tether has earned a reputation for being one of the most trusted stablecoins. Tether Gold was introduced in 2020 and it grew to one of the most popular gold-pegged tokens with a market capitalization of $469 million USD.
One token is one fine troy-ounce of gold on a London Good Delivery Bar. Tether Gold reserves are kept in Swiss vaults. Investors are required to pay 0. 25% fee per transaction.
AABBG, a crypto company that has never had to deal with finance or cryptocurrency, is an unusual example of a startup in the space. Asia Broadband Inc. (AABB) founded AABBG. AABB is a resource firm that focuses on the production, supply and sale of precious metals and base metals.
Unlike other gold-pegged tokens in which the gold comes from a range of sources, 100% of the gold purchased using AABBG comes directly from the company’s mining project. This eliminates the need for intermediaries and guarantees that investors receive their gold directly from the source. The unique mine-to token gold-backing format verifies each token’s gold assets.
The token has a current market cap of $97,382,859.21. It can only be purchased using an official AABB Wallet, and requires Bitcoin or Ethereum to make the transaction.
AurusGOLD (AWG)
AurusGOLD, better known as AWG, is minted by gold traders who arbitrage between the AWG and bullion gold markets. It has a market cap of $1,880,988.
Each token is redeemable for 1 gram gold from London Bullion Market Association’s certificate refineries. AWG also offers precious metals diversification for investors who aren’t keen on gold but want to hold other precious metals. Investors can buy tokenized precious metals in the same manner as gold, and keep them in their crypto wallets.
AWG is available for purchase on many Aurus partnered exchanges. The most popular exchange is CEX.IO and precious metal dealers include Direct Bullion and Aurica Group.
PAX Gold (PAXG)
Pax Gold, a trust company and custodian based in the USA, was created by Paxos. Each token equals one troy ounce of a London-Right Delivery bar of Gold.
The PAXG token was launched in 2019 and is backed by gold stores in Brink’s vaults, which are approved by the London Bullion Market Association. It has a market cap of $610,389,228 and is the only gold token that investors can redeem for LBMA-accredited Good Delivery gold bullion bars.
The easiest way to buy PAX Gold is through Coinbase, where it can be bought with Ethereum (ETH).
Final Thoughts – The Future of Gold Pegged Tokens
Although physical gold has a reputation as one of the safest investments, it is not easy to own it. You can store it in physical bullions at home or pay a fee to have them stored at a storage facility.
Gold-pegged tokens make it significantly easier for individuals to own gold without ever needing to store it themselves.
As a more affordable and convenient option, gold pegged tokens could become the dominant form of gold ownership in the future for a global, decentralized population.
However, the future of gold-pegged tokens could look very different.
For one, various decentralized finance projects and decentralized exchanges allow people to earn interest on their gold deposits in a variety of mechanisms, such as lending or through liquidity pools.
Some highly experimental projects are even creating synthetic assets that derive their value algorithmically rather than basing it on a physical deposit of assets.
While this list is not exhaustive, nor is it prescriptive, and none of our content are investment advice, it is important to learn about the interplay between traditional finance (gold), and decentralized finance(cryptocurrency).
Vote postponed to renominate SEC commissioner Caroline Crenshaw
Senate Banking Committee chair Sherrod Brown called it a “disgusting smear campaign against Caroline Crenshaw” The vote was postponed minutes before it was due to begin by Brown No date has been set for Crenshaw’s renomination A US Senate vote to renominate Democrat Commissioner Caroline Crenshaw to the Securities and Exchange Commission (SEC) has been…
Senate Banking Committee chair Sherrod Brown called it a “disgusting smear campaign against Caroline Crenshaw”
The vote was postponed minutes before it was due to begin by Brown
No date has been set for Crenshaw’s renomination
A US Senate vote to renominate Democrat Commissioner Caroline Crenshaw to the Securities and Exchange Commission (SEC) has been postponed.
The vote was originally scheduled on December 11; however, it was postponed minutes before it was due to begin, reports Bloomberg. Sherrod Brown, the Senate Banking Committee chair, delayed the vote. When Brown requested the vote occur later that day, Republican senators blocked his request.
Brown later released a statement saying that corporate special interests are running a “disgusting smear campaign against Caroline Crenshaw.”
No date has been set for her renomination.
Earlier this week, crypto and blockchain advocacy groups voiced their opposition to Crenshaw’s renomination.
In a letter to Brown and Senate Banking Committee Ranking Member Tim Scott, the Blockchain Association and the DeFi Education Fund argued that Crenshaw’s actions have undermined Congress’s mandate to establish clear regulatory policies for the crypto industry.
In their letter, they mention Crenshaw’s “continued opposition to the approval of a spot Bitcoin ETP.”
Following the news of Crenshaw’s reappointment, Brian Armstrong, CEO of Coinbase, took to X to say: “She tried to block the Bitcoin ETFs, and was worse than Gensler on some issues (which I didn’t think was possible).”
A Republican-majority SEC?
The delay to Crenshaw’s renomination opens up the possibility of a three-person Republican SEC once Donald Trump enters the White House in January. Crenshaw’s term at the SEC officially ended in June; however, if she’s renominated she would be the only Democratic SEC commissioner.
The SEC can make up to five commissioners, but no more than three can form the same political party. Current SEC chair Gary Gensler, a Democrat, is stepping down on January 20, and SEC Commissioner Jaime Lizárraga, also a Democrat, will step down on January 17.
Australia fines Kraken operator $5 million for non-compliance
Kraken operator in Australia Bit Trade will pay a $5.1 million fine for non-compliance with regulatory requirements. The Australian Securities and Investment Commission accused the crypto platform of offering a credit facilty that did not comply with regulations. Kraken crypto exchange’s Australian operator firm has been slapped with a AU$8 million ($5.1 million) fine for…
Kraken operator in Australia Bit Trade will pay a $5.1 million fine for non-compliance with regulatory requirements.
The Australian Securities and Investment Commission accused the crypto platform of offering a credit facilty that did not comply with regulations.
Kraken crypto exchange’s Australian operator firm has been slapped with a AU$8 million ($5.1 million) fine for non-compliance with Australian regulations.
The Australian federal court fined Bit Trade following a lawsuit by the Australian Securities and Investment Commission. In its order, the court said that the Kraken crypto exchange operator must comply with the country’s crypto regulations.
The court ordered that the exchange ought to pay 8 million Australian dollars as a penalty for non-compliance with the local regulations. Notably, Kraken recently announced a licensed broker offering for clients in Australia.
Bit Trade failed to comply with regulations
In August this year, the court ruled in favour of the Australian Securities and Investment Commission. The regulator had filed a case accusing Bit Trade of issuing a credit facility without following the legal proceedings.
ASIC argued that Bit Trade did not make the target market determination, a requirement to protect investors. Between October 2021 and August 2023, ASIC stated that the firm offered a margin extension to 1,100 users which cost them a loss of over $5.2 million without following the legal requirements.
The market regulator’s demand was Bit Trade to pay a fine worth 20 million Australian dollars. On their argument, Bit Trade put their limit to a maximum of four million Australian dollars. The penalty follows these proceedings, and the Kraken operator in Australia has 60 days to comply with the order.
In addition, the firm would cover for all the commissions court proceedings costs.
Kraken has faced regulatory hurdles in the US too, with the Securities and Exchange Commission (SEC), suing the exchange earlier in November 2023.
SEC’s allegations include Kraken offering of unregistered activities and operating as an unregistered broker. In August 2024, a US court denied the exchange’s motion that sought to dismiss the SEC’s lawsuit.
Saylor and Bukele Discuss How El Salvador Can Accelerate Global Bitcoin Adoption
Michael Saylor has met with Salvadoran President Bukele to discuss accelerating global bitcoin adoption as El Salvador strengthens its position, continuing to accumulate bitcoin despite IMF-driven policy adjustments. Michael Saylor Meets Nayib Bukele to Discuss Bitcoin Strategy Michael Saylor, executive chairman of Microstrategy (Nasdaq: MSTR), met with El Salvador’s President Nayib Bukele on Feb… Read More