Tether launches gold-backed lending service with $23 billion reserves

Tether, the company behind the USDT stablecoin, is venturing into the collateralized lending market by leveraging its substantial gold reserves, estimated at $23 billion (approximately 35 trillion Korean won).

The new business will allow borrowers to use "Tether Gold" (XAUT) tokens as collateral for loans. XAUT tokens are directly linked to the value of physical gold stored in Swiss vaults, offering a way to access liquidity without selling the underlying asset. This move is expected to enhance the utility of Tether's gold holdings and create new avenues for revenue generation.

Tether announced that the service will be available through the virtual asset lending platform Ledn within the current year. Historically, gold-backed lending has been dominated by central banks and major financial institutions. However, tokenizing physical gold, as Tether has done with XAUT, allows it to function as a digital collateral asset on the blockchain, similar to Bitcoin, thereby increasing its accessibility and usability in the digital finance ecosystem.