A $6 Billion Sector That Barely Existed Two Years Ago
The tokenized commodities market crossed $6.1 billion in total capitalization during the second week of February 2026, with gold-backed tokens accounting for nearly all of that value. The milestone, first highlighted by Cointelegraph, caps a 360% year-over-year expansion and a 53% surge in just six weeks.
Two tokens dominate the space. Tether Gold (XAUT), backed by allocated gold held in Swiss vaults, commands a $3.6 billion market cap after gaining 51.6% in the past 30 days. PAX Gold (PAXG), issued by Paxos and audited monthly with London-vaulted reserves, sits at $2.3 billion following a 33.2% monthly rise. Together they control roughly 96.7% of the entire tokenized gold market.
The numbers tell a story of acceleration: $2 billion of the current total was added since January 1 alone, and more than 1.2 million ounces of physical gold now sit in custody backing on-chain tokens.
Why Gold Is Pulling Capital On-Chain
Physical gold hit an all-time high of $5,608 per ounce on January 29, 2026, before pulling back to the $5,050 range by mid-February. That 80%-plus annual rally has made gold one of the best-performing macro assets of the cycle, and tokenized versions let crypto-native investors ride the wave without leaving the blockchain.
The appeal is straightforward: 24/7 trading, fractional ownership, no storage logistics, and composability with DeFi protocols. A holder of PAXG or XAUT can use their gold as collateral, supply it to lending markets, or swap it instantly on a DEX. None of that is possible with a gold ETF, let alone a bar in a vault.
Meanwhile, Bitcoin has moved in the opposite direction. From its October 2025 high near $126,000, BTC has declined over 52% and recently traded in the $60,000 to $69,000 range. That divergence has pushed risk-averse crypto capital toward gold-backed tokens rather than out of the ecosystem entirely. Investors are rotating, not exiting.
The Duopoly Problem
The 97% concentration in two issuers is the sector's most obvious vulnerability. If either Tether or Paxos faced a regulatory action, a custodial failure, or even a prolonged audit dispute, the shockwave would hit virtually the entire tokenized gold market.
Tether Gold stores its backing in Switzerland and does not submit to the same monthly attestation schedule that Paxos follows. PAXG, by contrast, operates under the New York Department of Financial Services (NYDFS) framework, with regular third-party audits of its London-vaulted reserves. The two tokens serve slightly different trust profiles: XAUT leans on volume and liquidity, while PAXG leans on regulatory credibility.
Smaller players exist. Tokens like KAU (Kinesis), CACHE Gold, and Quorium's QGLOD collectively account for the remaining 3.3% of the market, but none has cracked meaningful adoption. Until a third issuer builds comparable trust and liquidity, the duopoly looks durable.
Tether is doubling down regardless. The company recently invested $150 million in Gold.com, acquiring roughly 12% of the platform to expand XAUt distribution and integrate tokenized gold into a broader retail channel.
What This Means for Crypto Holders
For investors already in the crypto ecosystem, the $6 billion tokenized gold market creates a hedge that does not require off-ramping. Here is why that matters:
Portfolio rotation without friction. A trader who wants to reduce BTC exposure during a drawdown can swap into PAXG on Uniswap or XAUT on a centralized exchange in seconds. The gold exposure is real, backed 1:1, and redeemable for physical bars at both Tether and Paxos (minimum redemption thresholds apply).
DeFi composability. PAXG and XAUT can serve as collateral on lending protocols like Aave, adding a non-correlated asset to borrowing strategies. Some users are already pairing gold-backed tokens with stablecoin positions to create low-volatility yield strategies.
Spending integration. Gold-backed tokens can be loaded onto crypto debit cards that support ERC-20 top-ups. If you hold PAXG, you can convert to USDC and spend through cards that accept stablecoin funding. The conversion step adds friction, but the path from gold vault to point-of-sale terminal now exists entirely on-chain.
Tax considerations. In many jurisdictions, gold is treated as a commodity, and selling tokenized gold triggers capital gains events. Crypto holders accustomed to token-to-token swaps being non-taxable (depending on jurisdiction) should note that gold-backed tokens may follow different rules. Consult local tax guidance before rotating significant positions.
The Broader Tokenized Asset Landscape
Tokenized gold is the headline, but it is part of a larger trend. The total market for tokenized real-world assets (RWAs) hit $24.6 billion in January 2026, an all-time high. Within that:
- Tokenized funds (including Treasury bill products from BlackRock, Franklin Templeton, and others) hold $17.2 billion, up 3.6% month-over-month.
- Tokenized stocks reached $538 million, growing 42% as platforms like Binance push internet capital markets forward.
- Tokenized commodities (overwhelmingly gold) represent $6.1 billion, the fastest-growing sub-sector by percentage.
Ethereum remains the dominant infrastructure layer for tokenized gold, though Arbitrum, BNB Chain, and Solana now host derivative versions and wrapped assets. The institutional pipeline is accelerating too: Ark Invest projects the total tokenized asset market could exceed $11 trillion by 2030, and firms like JPMorgan, UBS, and the NYSE are building the rails to make that plausible.
For crypto card users, the RWA boom matters because it expands the universe of on-chain assets that can ultimately feed into spending. Today, most crypto cards accept stablecoins, BTC, and ETH. As tokenized gold, bonds, and equities grow, the gap between "investment portfolio" and "spending balance" continues to shrink.
FAQ
What is tokenized gold? Tokenized gold is a blockchain-based token backed 1:1 by physical gold held in custody. Each token represents a specific quantity of real gold (typically one troy ounce), and holders can redeem for physical delivery above minimum thresholds.
Which tokens dominate the tokenized gold market? Tether Gold (XAUT) and PAX Gold (PAXG) control approximately 97% of the $6.1 billion market. XAUT holds $3.6 billion in market cap, while PAXG holds $2.3 billion.
Can I spend tokenized gold with a crypto card? Not directly in most cases. However, you can convert PAXG or XAUT to stablecoins like USDC and then load those onto crypto debit cards that accept ERC-20 or stablecoin top-ups.
Is tokenized gold safer than holding Bitcoin? Gold-backed tokens carry different risks. They are less volatile than Bitcoin but depend on the issuer's custodial integrity and regulatory standing. Physical gold backing provides a floor value, but the token itself carries smart contract risk and issuer counterparty risk.
Why is tokenized gold growing so fast in 2026? Physical gold hit all-time highs near $5,600 per ounce, Bitcoin declined over 52% from its October 2025 peak, and crypto investors sought safe-haven exposure without leaving the on-chain ecosystem.
Overview
The tokenized gold market crossed $6.1 billion in February 2026, tripling in six months and growing 360% year-over-year. Tether Gold ($3.6B) and PAX Gold ($2.3B) control 97% of the sector, backed by over 1.2 million ounces of physical gold. The surge reflects record bullion prices near $5,000 per ounce and a rotation by crypto investors seeking non-correlated, on-chain safe-haven assets during a prolonged Bitcoin drawdown. The milestone positions tokenized commodities as the fastest-growing segment of the $24.6 billion RWA market, though the duopoly concentration and divergent auditing standards between the two dominant issuers remain key risks to watch.
Recommended Reading
- Binance Formally Recognizes Internet Capital Markets as Crypto's Next Infrastructure Layer, With $664M Already on Chain
- BlackRock Brings Its $180 Billion BUIDL Fund to Uniswap, Marking Wall Street's First Direct DeFi Integration
- Binance and Franklin Templeton Launch Tokenized Money Market Fund Collateral Program for Institutional Traders
