What a gold token is
A gold-backed token is a claim on physical gold held by a custodian on the issuer's behalf. One token equals one fine troy ounce of London Good Delivery gold; the issuer publishes attestations of the vault holdings; holders of enough tokens can redeem for physical bars, and everyone else trades the token at the gold price on exchanges and DEXs. The point is gold exposure that moves like a crypto asset: divisible, transferable in minutes, usable as collateral on-chain.
Two tokens hold almost the entire market.
Side by side
| PAX Gold (PAXG) | Tether Gold (XAUT) | |
|---|---|---|
| Issuer | Paxos Trust Company, New York | TG Commodities (Tether group) |
| Regulator | New York Department of Financial Services (trust charter) | Not a US-regulated trust; oversight follows the issuer's own jurisdiction |
| Gold location | LBMA-accredited vaults in London (Brink's) | Vaults in Switzerland |
| Backing | Allocated — each token maps to specific bars; serial numbers lookable by address | Allocated; bar list published |
| Attestation | Monthly, by an independent accountant | Periodic, published by the issuer |
| Chains | Ethereum (ERC-20) | Ethereum (ERC-20); other deployments have existed |
| Redemption for physical gold | Available to verified Paxos customers; a full 400-oz bar requires roughly 430 tokens; smaller amounts redeemable for cash at market | Available to verified customers for a minimum of one full bar (roughly 430 tokens); delivery in Switzerland |
| Smallest unit | 0.000000000000000001 PAXG (18 decimals) | 0.000001 XAUT (6 decimals) |
| Transfer cost | Ethereum gas; check the issuer's fee schedule for any on-chain transaction fee | Ethereum gas |
| Market depth | Deeper on US and EU venues and in DeFi | Deeper on venues in Tether's ecosystem |
| On SyntheticSwap | Yes — see the PAX Gold page | Not currently listed |
The differences that matter
Regulatory posture. PAXG is issued by a New York-chartered trust company under NYDFS supervision, the strictest oversight of any gold token. XAUT sits within the Tether group outside the US trust framework. For a holder this mostly affects two things: the credibility of the attestation, and what happens in an insolvency (a trust structure segregates customer gold from the issuer's own balance sheet).
Transparency. Paxos lets you look up the serial numbers of the bars backing a specific Ethereum address. Tether publishes a bar list. Both are allocated gold — not a pooled claim — which is the property that matters most.
Redemption. Neither is practical to redeem physically for a small holder: the minimum is roughly one full bar. In practice, small holders exit by selling the token at market, which both support. The redemption right still matters because it is what keeps the token at the gold price — arbitrageurs can redeem if it trades below.
Chains and fees. Both are Ethereum ERC-20 tokens, so transfers cost Ethereum gas. This makes small transfers expensive; gold tokens are a holding instrument, not a payment rail.
Risks specific to tokenised gold
- Issuer and custodian risk. The token is a claim; the gold is with a custodian; the attestation is periodic. Between attestations you are trusting the issuer.
- Redemption friction. Physical redemption requires verification and a large minimum; in a stress scenario the market price could drift from the gold price if arbitrage is slow.
- Smart-contract and freeze capability. Both issuers can freeze tokens under legal compulsion, like stablecoin issuers.
- Gold itself. A token tracks the gold price; it does not remove gold's volatility or the possibility of a long drawdown.
Getting PAXG without an exchange account
PAXG is on SyntheticSwap's core list with a direct pair from Bitcoin: PAXG → BTC for the exit, and the reverse route via the PAX Gold page form. Two things to know:
- Confirmations. PAXG deposits are waited for 100 Ethereum confirmations (about 20 minutes) — a conservative finality margin for a high-value asset — so a PAXG → BTC swap is slower on the deposit side than an ordinary ERC-20 swap.
- Receiving address. A standard Ethereum address (0x…) that you control; a hardware wallet is fine. You do not need ETH to receive; you need ETH for gas only when you later move it.
Frequently asked questions
Which is safer, PAXG or XAUT? PAXG has the stronger regulatory structure (NYDFS trust) and per-address bar transparency. XAUT is backed by allocated gold as well; the difference is oversight, not backing.
Can I redeem for coins or small bars? Not through the issuers; their minimum is a full bar. Sell the token instead.
Do gold tokens pay yield? No. Gold does not; some DeFi protocols accept PAXG as collateral, which is a separate risk.
Is holding a gold token taxed like gold? Depends on jurisdiction; in some, tokenised gold is treated as the underlying commodity, in others as a crypto asset. Check locally.
Why is XAUT not on SyntheticSwap? The core list is limited to assets with reliable liquidity from the routing sources; PAXG qualifies today. The coins page shows the current list.
PAXG (ERC-20) → BTC
BTC → USDT (TRC-20)
USDT (TRC-20) → BTC