Guotai Haitong: How is the development status of stablecoins backed by gold?

Guotai Haitong released a research report stating that compared to other gold investment products such as gold ETFs and futures, the decentralized characteristics of stablecoins have increased the convenience of gold trading. The gold stablecoin market is currently in a situation of "dual dominance", with XAUT coins issued by Tether and PAXG coins issued by Paxos each holding nearly half of the market share. As of June 2025, the market value of the gold stablecoin market has reached $1.6 billion, accounting for approximately 0.67% of the total stablecoin market value, making it the third largest category of stablecoins after USD stablecoins and cryptocurrency collateralized stablecoins. Guotai Haitong's main points are as follows: The combination of gold and stablecoins has advantages, but future development also requires overcoming some obstacles. With improvements in mechanisms, gold stablecoins can serve as a store of value and for payment and settlement functions under specific conditions. Gold Stablecoin: The Rising Star in the "Coin Circle" After USD stablecoins became the hot "star coins" in the stablecoin market, gold stablecoins are also quietly rising. As the name suggests, gold stablecoins are cryptocurrencies pegged to gold, they have the same characteristics as other types of stablecoins, namely stable coin value and decentralization. The gold stablecoin market is currently in a situation of "dual dominance", with XAUT coins issued by Tether and PAXG coins issued by Paxos each holding nearly half of the market share. As of June 2025, the market value of the gold stablecoin market has reached $1.6 billion, accounting for approximately 0.67% of the total stablecoin market value, making it the third largest category of stablecoins after USD stablecoins and cryptocurrency collateralized stablecoins. Combinational Advantage: Empowering Gold Trading with Stablecoins Compared to other gold investment products such as gold ETFs and futures, the decentralized characteristics of stablecoins have increased the convenience of gold trading: - Reducing temporal and spatial restrictions: Gold stablecoins operate on the blockchain, allowing for fast global transactions at any time. - Lowering investment thresholds: Gold stablecoins correspond to ownership of gold bars, and during trading, gold bars can be fragmented and traded down to six decimal places (approximately 0.02 USD). - Lowering transaction costs: Gold stablecoins charge only low transaction fees (e.g. PAXG coins charge two thousandths). Development of Gold Stablecoins: Overcoming Three Difficulties Firstly, there is a natural conflict between the monetary function advantages of gold and stablecoins. Stablecoins mainly enhance the payment and settlement functions of money, while gold plays more of a role in storing value. The combination of gold and stablecoins in terms of monetary functions appears strained. Secondly, gold stablecoins have not fully utilized their inherent value stability properties. The number of gold stablecoin holders is very low, resulting in a lower trading turnover rate, shallow market depth, and deviations from the London gold price. Thirdly, there is a contradiction between the credit verification issues of gold stablecoins and the decentralized and trustless characteristics pursued by blockchain. The regulatory framework for physical collateralized stablecoins is still lagging behind in various countries, and stablecoin laws passed in the US and Hong Kong only cover fiat-backed stablecoins. Gold stablecoins still face uncertainty in compliance, which is also a significant reason for investors to be cautious. However, with improvements in mechanisms, gold stablecoins can still serve as a store of value and for payment and settlement functions under specific conditions. Risk warning: Gold stablecoins deviate significantly from the current price of gold, posing legal and compliance risks for investors and issuers.