Best Gold Backed Cryptocurrency

Top Gold-Backed Cryptocurrencies

In a review of over 10 gold-backed crypto assets, three stood out for their regulatory compliance, proof-of-reserves security measures and liquidity. These tokens, backed by physical gold, offer solid options for investors to diversify and protect against market volatility. 

They provide a modern way to invest in gold, combining the security of a traditional asset with the flexibility of digital currency.

‍

1. Pax Gold (PAXG)

Pax Gold (PAXG) is a top choice for gold-backed crypto, offering direct exposure to physical gold with the flexibility of a digital asset. Each PAXG token is tied to one troy ounce of London Good Delivery gold, held securely in LBMA-approved vaults. Built on Ethereum, it’s easily accessible through any compatible wallet.

PAXG is regulated by the New York State Department of Financial Services and managed by Paxos Trust, ensuring strong oversight. With no storage fees and instant settlement, it’s the only token that can be fully redeemed for physical LBMA gold bars. Daily trading volume exceeds $10 million, making PAXG a reliable and liquid option for investors seeking a gold hedge.

‍

2. Tether Gold (XAUT)

Tether Gold (XAUT), issued by Tether Limited, provides access to physical gold through the flexibility of a digital token. Each XAUT is backed by gold stored in secure vaults worldwide. Unlike Pax Gold, XAUT is available as collateral on DeFi platforms like Curve Finance and Uniswap, allowing investors to tap into yield farming or provide liquidity.

With over $4 million in daily trade volume, XAUT offers solid liquidity but less than PAXG. It supports 24/7 trading and allows for physical gold redemption in Switzerland with a one-time fee of 25 basis points. Backed by Tether, one of the most recognized names in crypto, XAUT presents a strong alternative to PAXG for investors seeking a flexible gold-backed asset.

‍

3. Comtech Gold (CGO)

Comtech Gold (CGO) has established itself as the leading gold-backed cryptocurrency in the Middle East, providing a trusted digital investment option backed by physical gold. Each CGO token represents one gram of 24K gold, securely stored in DMCC-approved vaults in Dubai. Built on the XDC blockchain, CGO offers instant settlement, zero custodian fees, and full transparency.

CGO stands out as the region's first Shariah-compliant gold token, making it a trusted choice for Islamic finance. Investors can easily convert tokens into physical gold, enhancing its appeal. With daily trading volume around $600,000, it’s less liquid than competitors but remains a reliable, secure option for those seeking digital gold exposure in the Middle East.

‍

What is Tokenized Gold?

Tokenized gold digitizes ownership of physical gold through blockchain, transforming it into easily tradable tokens representing specific vault-held amounts. This method enables fractional gold ownership, provides immutable transparency, and boosts liquidity in digital markets.

To ensure these tokens are fully backed, decentralized oracle networks like Chainlink provide essential verification services by confirming that the physical gold reserves exist and match the digital claims. This integration assures investors of the asset's authenticity and stability.

‍

Is Tokenized Gold Regulated?

The regulation of tokenized gold depends on the issuer and jurisdiction, with different platforms following unique legal frameworks. Key factors like security protocols, audit frequency, and compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC) rules vary across issuers.

Pax Gold (PAXG), for instance, adheres to strict regulatory standards. Issued by Paxos Trust and regulated by the New York State Department of Financial Services, PAXG undergoes regular audits and follows strict compliance procedures. 

In contrast, Tether Gold (XAUT) is issued by TG Commodities Limited, an offshore entity and sister company to Tether. It operates in a regulatory grey area and offers less transparency compared to PAXG.

‍

How to Buy Gold-Backed Cryptocurrencies

To invest in gold-backed cryptocurrencies like Pax Gold (PAXG), selecting a secure and regulated platform is key. Uphold, known for its strong regulatory compliance globally and broad asset selection, is a top choice. It supports PAXG along with over 250 cryptocurrencies and 30+ fiat currencies, including USD, EUR, GBP, and more. 

Here’s a quick guide to getting started:

1. Create an Account: Sign up on Uphold and complete the verification process.
2. Link Your Bank: Navigate to 'My Banks' and connect your preferred account.
3. Fund Your Account: Deposit funds in your chosen currency.
4. Buy PAXG: Use your funds to purchase PAXG or other assets instantly.

‍

Can I Earn Yield with Gold Tokens?

Yes, you can earn a yield on gold-backed tokens like PAXG through DeFi platforms. 

A common method is providing liquidity, which involves supplying assets to decentralized exchanges like Uniswap to facilitate trades.

By joining pools such as PAXG-WETH, investors can potentially earn annual yields, sometimes up to 3.5% APY.

‍

Bottom Line

Gold-backed tokens like Pax Gold (PAXG), Tether Gold (XAUT), and Comtech Gold (CGO) are reshaping gold investment by combining the safety of physical gold with the flexibility of crypto. Among them, PAXG distinguishes itself with top-tier regulatory compliance and depth of liquidity. 

These crypto assets offer more than digital gold ownership, they open doors for on-chain investors to explore diverse strategies like earning yield or borrowing within DeFi.