The tokenized commodities market has reached $7 billion, an increase of nearly 600% since the start of 2025. Jesse Knutson, head of operations at Bitfinex Securities, wrote that the growing adoption of tokenized commodities is not just a matter of new demand.
It helps transform raw materials into mobile and flexible assets that enable “reactive risk management” in an increasingly volatile geopolitical climate, he wrote in mid-April.
Tether Gold (XAU₮) represents almost 40% of the tokenized gold market. Adoption of tokenized commodities is higher among assets that investors trust more, such as gold.
Gold has many advantages. It is already anchored in traditional financial systems. Tokenization makes gold instantly transferable and universally auditable, avoiding settlement times and friction associated with the movement of raw materials.
Tokenization has expanded beyond gold. This now includes agricultural materials, oil and gas. And extends to industrial metals like copper
The transparency that comes with tokenization improves supply chain integrity, the Bitfinex report reads.
Tether Gold Surpasses $3.3 Billion in Total Market Value
Yet, as it stands, tokenized commodities are dominated by gold-backed tokens. The increased demand for gold is a result of increasing geopolitical and monetary uncertainty.
Total gold demand in the first quarter, including over-the-counter, increased 2% year-on-year. Combined with the massive price rise, the value of quarterly gold demand jumped 74% to a record high of $193 billion.
Tether Gold saw a 36% quarter-over-quarter increase in underlying gold reserves, and the report highlighted that the scale and speed of inflows reflected a structural change and was not solely explained by investors viewing gold as a hedge against uncertainty.
There are 707,747.09 XAU₮ tokens in circulation. Each token is physically backed 1:1 by a fine troy ounce (approximately 31.103 grams) of gold. XAU₮ has a total market value of $3.303 billion and 148,145.45 XAU₮ tokens are available for sale.
Paolo Ardoino, CEO of Tether, said:
Tether Gold proves that tokenized commodities can operate with the same seriousness, scale, and reserve discipline expected of major institutional securities. It allows people and institutions to gain direct exposure to physical gold while benefiting from the transparency, portability and accessibility of blockchain-based assets.
Strict 1:1 backing, regulated issuance, and vaulted reserves in Switzerland have given Tether Gold the transparency and investor confidence needed to keep it at the forefront of the real-world token asset market.
Gold, which typically plays a passive role as a store of value in investors’ portfolios, has transformed into a more active collateralized financial instrument.
Final summary
- The largest gold holder, Tether Gold, reported a 36% increase in its gold reserves in the first quarter.
- The speed and scale of capital flows into tokenized gold represented a structural change and were not simply attempts to hedge investors.
