Tether's Gold Holdings Rival Central Banks: Diversification Strategy & Market Impact

Tether's Gold Holdings: A Rising Force in the Precious Metals Market

Recent data reveals that stablecoin issuer Tether holds 116 tonnes of physical gold, positioning it alongside central banks of countries like South Korea, Hungary, and Greece. According to a recent analysis by Jefferies, Tether is now considered “the largest holder of gold outside central banks.”

Tether's Growing Influence on the Gold Market

A report by the Financial Times suggests that Jefferies believes Tether's increasing appetite for gold may be playing a more significant role in the metal's recent price surge than previously assumed. Estimates indicate that Tether’s gold purchases in the last quarter accounted for nearly 2% of total global gold demand and roughly 12% of central bank purchases.

Anticipation of Further Gold Acquisitions

Investors cited by Jefferies anticipate that Tether aims to acquire an additional 100 tonnes of gold in 2025. With the company on track to potentially reach $15 billion in profits this year, this target appears within reach.

Diversifying Investments: Beyond Gold

In addition to physical gold, Tether has also invested over $300 million this year in acquiring stakes in precious-metal production companies. In June, it acquired a 32% stake in Canada's Elemental Altus Royalties, a gold royalty firm. Tether is also exploring investments across the gold supply chain, including mining, refining, trading, and royalty companies.

XAUt Gold Token: Tether's Bet on the Future

Tether also issues a gold-backed token called Tether Gold (XAUt), launched in 2020. Blockchain data shows that XAUt issuance has doubled over the past six months, with Tether adding 275,000 ounces (approximately $1.1 billion) since August. Jefferies believes that Tether is betting that tokenized gold will finally gain traction, as investors see physical gold as cumbersome for retail investors, gold futures carry roll costs, and gold ETFs charge relatively high fees. Tether contends that tokenization solves these problems.

Tether: A Central Bank in Disguise?

Tether's day-to-day operations mirror several core functions traditionally associated with central banks. It mints and redeems USDt (USDT) directly for verified customers, effectively expanding or contracting supply through its primary market pipeline. It also manages a large reserve portfolio dominated by short-duration US Treasurys, along with gold and Bitcoin (BTC). The company also generates central bank-like income by earning interest on these Treasurys while issuing a non-interest-bearing token.

Moreover, Tether employs policy-style tools, such as freezing addresses at the request of law enforcement and phasing out blockchains to mitigate risk.