Tether has expanded the use of its $23 billion gold reserves by bringing its tokenized product Tether Gold (XAUT) to crypto lender Ledn.
Ledn said it was adding support for XAUT, alongside Bitcoin and Tether’s USDT stablecoin, with borrowing against XAUT expected later this year.
Tether is attempting to monetize what has become one of the world’s largely private gold reserves. The stablecoin company claims to hold approximately $23 billion in physical bullion backing XAUT, with each token representing a troy ounce of gold stored in vaults in Switzerland.
Gold-backed loans have traditionally been the domain of central banks, large financial institutions and precious metals traders. Tether and Ledn argue that by tokenizing physical gold, the asset can function more like a physical bitcoin as digital collateral, freeing up liquidity without having to sell it.
This follows the model that Ledn has used for several years for bitcoin-backed loans. Customer collateral continues to be held 1:1, without being lent out or used to generate yield, Ledn said, seeking to draw a line between the services it offers and those of its former rivals that went bankrupt during the crypto winter of 2022.
