As investors flock to gold as a safe-haven asset, few anticipated that one of the key drivers behind gold's record-breaking rally this year would be Tether—the controversial stablecoin issuer in the cryptocurrency world. This digital asset giant has acquired more gold than several central banks. Meanwhile, following the rise of dollar-pegged stablecoins as market favorites, gold-backed stablecoins are quietly gaining traction. These stablecoins, tied to gold, share characteristics with other stablecoins, such as price stability and decentralization.

**Gold Purchases Surpass Some Central Banks** Gold has seen an epic surge in 2025, soaring 56% year-to-date. While central banks continue their gold-buying spree, Tether—the issuer of the dollar-pegged stablecoin USDT—has emerged as a major buyer. According to estimates by investment bank Jefferies, Tether held 116 tons of gold, worth approximately $14 billion, as of September 30, making it one of the largest single holders of gold outside major central banks. Its holdings rival those of countries like South Korea, Hungary, or Greece.

Gold's rally unfolded in two phases: a $1,000 surge in the four months leading up to April, coinciding with tariff shocks and a 10% drop in the dollar, followed by another $1,000 climb from mid-August to mid-October, despite the dollar stabilizing. While central banks remained the dominant buyers for most of the year—purchasing around 220 tons in Q2 and Q3 combined—Tether's influence proved significant. Jefferies noted that gold's second rally aligned with Tether's accelerated gold acquisitions.

In Q3 alone, Tether bought about 26 tons, accounting for roughly 2% of global gold demand and 12% of known central bank purchases. In Q2, its acquisitions equaled 14% of central bank gold purchases. The report suggests Tether is building gold reserves for two tokens: USDT, the largest dollar-pegged stablecoin with $174 billion in circulation by late Q3 (rising to $184 billion by November 17), and XAUt, its gold-backed stablecoin. Jefferies speculates gold's share in Tether’s reserves may have grown in recent weeks.

**Safe Haven or Speculation?** Tether’s gold reserve strategy conflicts with U.S. crypto regulations. For instance, the landmark GENIUS Act passed in July prohibits compliant issuers from using gold as a reserve asset. Tether has announced plans to launch a compliant stablecoin, USAT, which will sever ties with gold.

Analysts note that gold’s integration into the crypto ecosystem has ideological merit, as monetary debasement fuels demand for both assets. Many investors hoard gold and crypto as "stores of value" due to their limited supply rather than yield. However, their underlying dynamics differ starkly. While Bitcoin’s popularity has surged over the past decade, its volatility keeps it a speculative asset. Recently, Bitcoin mirrored tech stocks’ "risk-off" selloff, shedding a third of its value in six weeks despite shifting currency concerns to the yen.

Industry experts caution that while stablecoins differ from typical cryptocurrencies by offering asset-backed digital dollars, cyclical stress in crypto markets remains a risk. A sudden reversal in stablecoin demand could pressure their reserve assets—now heavily weighted in gold.

**The Rise of Digital Gold** Gold-backed stablecoins, with their decentralized features, offer greater convenience than ETFs or futures, becoming a niche favorite. As of June 2025, the gold stablecoin market cap reached $1.6 billion, accounting for 0.67% of all stablecoins and ranking third after dollar-pegged and crypto-collateralized stablecoins.

"Gold’s digitization aligns with global tech advancements," noted Wang Youxin of the Bank of China Research Institute. Though early-stage challenges exist, proper regulation could foster innovative financial products that complement traditional gold markets. However, low adoption of gold stablecoins results in thin liquidity and price deviations from spot gold.

Wang highlighted two critical issues for digital gold’s sustainable growth: 1. **Traceability**: Implementing full supply-chain transparency from mines to end-users poses technical hurdles, balancing data disclosure with commercial confidentiality. 2. **Governance**: Determining issuers, ensuring sufficient physical reserves, and mitigating moral risks in issuance require careful oversight.

Long-term, digital gold is unlikely to replace physical gold but may coexist, expanding financial use cases while traditional gold retains its role in value storage and consumption.