Tokenized Gold Explained: PAXG vs XAUT and How Redemption Works

Tokenized gold is a crypto token backed by physical gold held in a vault, where each token usually represents one fine troy ounce. The two largest are Tether Gold (XAUT) and Paxos Gold (PAXG). As of 2 October 2026, XAUT was worth about $2.95 billion and PAXG about $1.81 billion, according to rwa.xyz. You can trade them 24/7 and hold them in a wallet, but turning them into a real gold bar takes about 430 tokens, identity checks and delivery fees.

This guide explains how gold tokens work, how redemption works for XAUT and PAXG, why "gold-backed stablecoin" is a misleading label, how gold's 2026 price swings feed straight into these tokens, and what can go wrong.

What is tokenized gold?

A tokenized gold product has three parts:

• The gold. Physical bars, normally London Good Delivery bars of roughly 400 ounces, stored in a professional vault.
• The issuer. A company that buys the gold, holds it for token holders, mints tokens when people buy, and burns them when people redeem.
• The token. A blockchain token, usually one per fine troy ounce, that can be sent, traded and held like any other crypto asset.

Compared with buying a bar, you avoid storage and insurance yourself and can buy fractions of an ounce. Compared with a gold ETF, you can move the token between wallets at any hour and use it on crypto platforms. In exchange, you rely on the issuer's vault, audits and legal terms.

Tokenized gold sits inside the wider tokenized commodities category. As of 2 October 2026, rwa.xyz counted $5.16 billion in distributed tokenized commodities across 138 products and 449,440 holders. XAUT and PAXG together made up about $4.76 billion of that, roughly 92%.

XAUT vs PAXG at a glance

Sources: rwa.xyz, Tether Gold terms, Paxos and the PAXG terms and conditions, read on 2 October 2026.

The practical differences come down to three questions. Which regulator and legal entity do you want to rely on? A US national trust company for PAXG, or Tether's gold entity for XAUT. Where is the gold? London or Switzerland. And can you use it where you live? PAXG, for example, is not offered in the EU. Both tokens track the same metal, so their prices move together. What differs is who you are trusting and how you would get out.

How redemption works

Redemption is what makes a gold token "backed" rather than just priced like gold. It is also where most of the fine print is.

Redeeming Tether Gold (XAUT)

Under the Tether Gold terms, a holder can receive a London Good Delivery bar by redeeming the number of tokens equal to the fine ounces in that bar. Tether Gold may ask you to deposit 430 tokens. If the bar contains fewer ounces, either only the matching number is redeemed or the rest is returned to you. You then choose between:

• Physical delivery of the bar to an address in Switzerland, subject to the fees in Tether Gold's fee schedule.
• A sale of the bar on the Swiss gold market arranged by Tether Gold, which may involve a brokerage fee or dealer mark-up.

To redeem, you need a verified account with the issuer. Small holders in practice exit by selling XAUT on an exchange rather than redeeming.

Redeeming Paxos Gold (PAXG)

The PAXG terms set out three routes on the Paxos platform:

• USD. Convert PAXG to dollars at a streaming price quote.
• Unallocated gold. Receive the equivalent ounces into your own Loco London unallocated gold account.
• Physical bars. "You must redeem a minimum of 430 PAXG tokens plus the fee set forth in the Paxos User Guide, per London Good Delivery gold bar."

Paxos says the gold is held "on a segregated basis for the benefit of PAXG holders" in LBMA-approved vaults, and its product page lets holders look up the bar serial numbers linked to their address. Paxos currently advertises no storage fee, but its terms reserve the right to charge one by minting new tokens, which dilutes holders. They also allow a $2 monthly inactivity charge on Paxos accounts with no issuance or redemption for 12 months. Paxos also states that PAXG is currently unavailable in the EU.

At the October 2026 gold price, a 430-ounce bar is worth about $1.8 million. Physical redemption is therefore realistic only for large holders. For everyone else, the token's value depends on the exchange price and on the issuer's ability to redeem in bulk for market makers.

Is tokenized gold a "gold-backed stablecoin"?

"Gold-backed stablecoin" is a common search term, but it can mislead. XAUT and PAXG are stable only in terms of gold. In dollar terms they rise and fall with the gold price, sometimes sharply.

A dollar stablecoin aims to stay at $1. A gold token aims to stay at one ounce. If you need a stable dollar value for payments, savings or loan repayments, a gold token is the wrong tool. If you want gold exposure that moves like a crypto asset, it is the right one. Our guide to stablecoins covers the dollar side, and stablecoin issuers in 2026 lists who issues what.

Gold price context in 2026

Gold set an all-time high of $5,589.38 an ounce on 28 January 2026, according to Investing News Network, which cited geopolitical tension, a weaker dollar and continued central-bank buying among the drivers. By 1 October 2026, spot gold was $4,180.59 at 9am ET, per CNBC. That is about 25% below the January peak.

Because each token is pegged to an ounce, XAUT and PAXG holders took that full fall. A token is a way to hold gold, not a way to remove gold's volatility. Tokenized gold can also trade at a small premium or discount to spot on individual exchanges, especially when liquidity is thin or markets move fast at weekends.

Risks of tokenized gold

• Issuer and custody risk. You rely on the issuer to hold the gold it reports and to honour redemptions. Read the attestation or audit reports, and check the issuer's legal entity and jurisdiction. Our explainer on proof of reserves explains what those reports can and cannot show.
• Redemption limits. The roughly 430-token minimum, verified accounts, fees and delivery rules (within Switzerland for XAUT) mean most holders cannot redeem directly.
• Price risk. Gold fell about 25% between its January 2026 high and October 2026.
• Regulatory and access risk. Availability varies by region. PAXG, for example, is not offered in the EU.
• Fee and dilution risk. Terms can allow storage fees charged by issuing new tokens.
• Smart contract and chain risk. Tokens issued on several chains, or used in DeFi lending, add code, bridge and liquidation risk.

JewelSwap does not issue or list tokenized gold. It is a crypto-native protocol on MultiversX, Sui and Radix, focused on liquid staking and yield farming. For how gold fits among other on-chain real-world assets, see real-world assets in DeFi.

Frequently asked questions

What is tokenized gold?

A crypto token backed by physical gold stored by an issuer, usually one token per fine troy ounce. The largest are Tether Gold (XAUT) and Paxos Gold (PAXG).

How big is the tokenized gold market?

As of 2 October 2026, rwa.xyz valued XAUT at $2.95 billion and PAXG at $1.81 billion, about $4.76 billion together. All tokenized commodities totalled $5.16 billion.

Can I redeem PAXG or XAUT for physical gold?

Yes, but only in whole bars. PAXG requires a minimum of 430 tokens plus fees per London Good Delivery bar. XAUT redeems one bar, about 430 tokens, with delivery within Switzerland. Both require a verified account with the issuer.

Is PAXG or XAUT a stablecoin?

Not in the usual sense. They are stable against an ounce of gold, not against the dollar, so their dollar value moves with the gold price.

Where is the gold behind PAXG and XAUT stored?

PAXG gold is held in LBMA-approved vaults in London on a segregated basis, per Paxos. XAUT gold is held in Switzerland, per Tether Gold's terms.

What is the gold price in October 2026?

Spot gold was $4,180.59 an ounce at 9am ET on 1 October 2026, per CNBC. That is about 25% below the all-time high of $5,589.38 set on 28 January 2026.

Keep reading

• Real-world assets (RWA) in DeFi explained
• Best RWA tokenization platforms in 2026
• Tokenized treasuries explained
• Tokenized stocks explained
• Proof of reserves explained
• JewelSwap crypto glossary

This article is educational and isn't financial advice. Token values are from rwa.xyz as of 2 October 2026, the gold price from CNBC as of 1 October 2026, and redemption terms from Tether Gold and Paxos as read on 2 October 2026. All may change. JewelSwap does not issue or list tokenized gold.