We audit well-liked gold tokens towards 5 belief exams, then examine them with BTC ETFs and native BTC settlement.
Binance founder Changpeng Zhao not too long ago claimed tokenized gold is just not on-chain in response to Peter Schiff arguing tokenized gold can outcompete Bitcoin.
Saying the apparent. Most individuals “in crypto” know this, most individuals “not in crypto” might not perceive but.
Tokenizing gold is NOT “on chain” gold.
It’s tokenizing that you simply belief some third occasion will provide you with gold at some later date, even after their administration adjustments, possibly many years later, throughout a warfare, and so on.
It’s a “belief me bro” token.
That is the explanation no “gold cash” have actually took off.
– @CZ_binance
Begin with the ledger.
When a consumer self-custodies BTC, the Bitcoin base layer confers ultimate settlement for the factor the consumer really owns, spendable BTC.
For a U.S. spot BTC ETF, the share settles on the securities depository on T+1, whereas the fund’s underlying BTC settles on the Bitcoin community contained in the custodian’s wallets.
For tokenized gold, the general public chain settles the token, however authorized title to steel sits in an issuer’s vault and documentation stack, and redemption requires the issuer, the custodian and bodily logistics.
Redemption paths make the excellence concrete. BTC may be withdrawn permissionlessly by paying a charge and ready for confirmations.
Against this, PAX Gold units a bar-sized threshold for direct bodily redemption, typically at round 430 ounces, and smaller redemptions are routed by companions and will take a number of enterprise days relying on methodology.
Tether Gold’s FAQ describes a direct redemption minimal of 1 London Good Supply bar after KYC by TG Commodities, with bars saved in Switzerland. Comtech Gold units a one kilogram minimal. The result’s clear, token transfers finalize on Ethereum or one other L1, however supply of steel is determined by issuer processes, KYC, bar availability and logistics home windows.
Admin-key publicity provides one other layer. Paxos retains freeze and improve controls for PAXG and has frozen addresses when directed by U.S. legislation enforcement, together with about 11,184 PAXG linked to FTX in 2022.
Tether Gold and Comtech Gold additionally function token contracts and redemption desks beneath issuer phrases, which implies balances may be immobilized on the contract or on the redemption step.
Bitcoin has no issuer key for consumer UTXOs. ETF shares may be halted inside securities guidelines, and the underlying BTC stays on-chain at a certified custodian.
Proofs full the image.
A number of BTC ETF issuers have moved to extra frequent reserve transparency.
Bitwise makes use of day by day third-party proof of reserves for its spot BTC ETF holdings, and ARK 21Shares pushes reserve knowledge on-chain by Chainlink Proof of Reserves fed by Coinbase.
Gold tokens depend on accountant attestations and bar-allocation portals somewhat than cryptographic proofs of vault holdings. Paxos supplies month-to-month reviews, now by KPMG.
Tether Gold publishes month-to-month reviews by BDO Italia, per its FAQ. These paperwork assist, however they don’t anchor vault state to public-chain state on the vault boundary.
A easy trust-stack scorecard helps examine the place settlement occurs, how redemption works, and who can intervene.
| Asset | Settlement ledger for what you personal | Redemption path | Admin-key floor | Proof cadence | Custodian / Vault |
|---|---|---|---|---|---|
| BTC, self-custody | Bitcoin L1 finality for spendable BTC | Permissionless withdrawal, community charge and confirmations | No issuer keys on L1 | N/A | Person holds keys |
| BTC spot ETF shares | DTCC share ledger, T+1 settlement | Brokerage rails, APs create and redeem | Company actions beneath securities guidelines | Every day PoR for some issuers, Chainlink PoR feeds | Certified crypto custodian holds BTC |
| PAX Gold (PAXG) | Ethereum token ledger for IOU, steel title off-chain | Direct bar redemption ≈ 430 oz, smaller by way of companions, KYC | Issuer can freeze and improve, prior freezes executed | Month-to-month KPMG attestations | Brink’s London by way of Paxos Belief |
| Tether Gold (XAU₮) | Ethereum token ledger for IOU, steel title off-chain | Direct 400 oz LGD bar after KYC by way of TG Commodities | Issuer-administered contract and redemption | Month-to-month BDO Italia reviews | Swiss vaults, TG Commodities |
| Comtech Gold (CGO) | XDC token ledger for IOU, bar information on DMCC Tradeflow | Direct redemption minimal 1 kg | Issuer-administered contract and redemption | Attestations by way of DMCC processes | DMCC-approved vaults |
Level-in-time provide snapshots reinforce scale and dispersion. Etherscan reveals about 331,000 PAXG excellent on Ethereum as of Oct. 23. Tether Gold’s Ethereum contract displays a most complete provide close to 522,000 XAU₮, with further provide on different networks. Explorer panels can combine circulating and most quantities, so issuer attestations stay the authoritative report for complete issuance.
The ETF aspect has tightened the hyperlink between shares and on-chain BTC. The SEC signed off on in-kind creations and redemptions for spot BTC ETFs on July 29, 2025, permitting approved members to ship or obtain BTC somewhat than money solely, which reduces frictions between the ETF’s share register and the underlying coin balances.
U.S. fairness markets run T+1 for share settlement, which frames intraday monitoring and first market home windows for the funds, based on DMCC. BlackRock’s spot car has drawn massive asset totals this month, with IBIT getting into the highest 20 U.S. ETFs by AUM.
Macro situations elevate the stakes.
Gold printed report intraday costs above $4,200 an oz in October 2025 on safe-haven flows and coverage expectations. HSBC lifted its 2025 common forecast to $3,355 {dollars}, up from $3,215, per Reuters.
If costs stretch and token holders attempt to redeem in measurement, the primary bottleneck is just not the chain, it’s the redemption desk and vault logistics. Bar-size minimums, KYC throughput and bar availability can create queues and slippage, which may present up as token premiums or reductions to identify throughout stress.
By comparability, in-kind ETF home windows give APs a direct lane to maneuver BTC for shares, which may help the fund monitor internet asset worth extra tightly than a cash-only mannequin when the market is gapping.
Freeze and compulsion threat additionally diverge. PAXG’s 2022 immobilization tied to FTX reveals that token balances may be frozen even when held in self-hosted wallets. ETF shares can face buying and selling halts or company actions, and the underlying BTC stays on-chain topic to custodian controls somewhat than per-address freezes on L1.
The core discovering throughout these instances is constant.
Tokenized gold settles tokens on public chains, whereas ultimate possession of steel rests in off-chain vault and custody methods managed by issuers and their companions.
BTC in self-custody settles natively on-chain. BTC spot ETFs settle shares at DTCC whereas the fund’s coin balances decide on L1 inside custodians, and several other issuers now expose reserve knowledge by day by day attestations or on-chain oracles.
If tokenized gold is a ticket, the chain information who holds the ticket, not who holds the bar.
