Gold Tokens Rise to $3.86B Amid CZ’s Skepticism Over Their Reliability

Even as gold prices cool from record highs, stabilizing near $4,100 per ounce, tokens pegged to the precious metal are gaining traction in crypto markets. Yet questions about their reliability persist.

The total market capitalization of gold-backed tokens has surged to $3.86 billion, driven largely by XAUT ($4,148.53) and Paxos Gold (PAXG), according to CoinGecko data.

However, Binance co-founder and former CEO Changpeng Zhao (CZ) has voiced caution. “Tokenizing gold is NOT ‘on-chain’ gold,” he posted on X. “It’s tokenizing that you trust a third party to deliver gold at some later date—even decades later, under uncertain circumstances, or during times of crisis.”

This dependence on centralized issuers mirrors concerns raised about stablecoins, whose value is pegged to traditional currencies like the U.S. dollar. A recent NYDIG report highlighted that even dollar-pegged tokens such as USDC and USDT can temporarily lose their peg during periods of extreme market stress.

During the recent $500 billion crypto market sell-off, for example, Ethena’s USDe briefly dropped to $0.65 on Binance, while USDC and USDT maintained levels above $1—showing that the “peg” is not an absolute guarantee.

Tokenized gold, while marketed as a hedge, carries similar embedded risks. “It’s a ‘trust me bro’ token,” CZ added, noting that no gold-backed token has truly achieved mass adoption.

Even the largest, Tether Gold, holds a market cap of just $2.1 billion—tiny compared with its dollar stablecoin counterpart USDT at $183 billion—highlighting the gap between promise and widespread usage in the gold token market.