Tether Launches Gold-Backed Stablecoin ‘Alloy’

Tether, one of the largest companies in the cryptocurrency industry, has officially launched Alloy by Tether, a new asset backed by Tether Gold. According to the official blog post, Alloy by Tether aims to redefine stability in the digital economy by combining the benefits of a stable economic unit with the security and reliability of gold.

Alloy by Tether introduces a new category of digital assets known as pegged assets. The first token in the Alloy by Tether series will be aUSD₮, a digital currency designed to track the value of one US dollar. The aUSD₮ token is over-collateralized by Tether Gold (XAU₮), meaning it is backed by real physical gold stored in Switzerland. Users can create aUSD₮ tokens using Tether Gold as collateral, managed by Ethereum-compatible smart contracts on the Ethereum Mainnet.

Paolo Ardoino, Tether’s CEO, expressed his excitement about the launch, stating, “We are excited to announce the launch of Alloy by Tether, offering a digital asset class backed by gold and tied to a reference fiat currency. This innovative solution marks an exciting turning point and allows the market to recover.” He also mentioned plans to integrate this technology into Tether’s upcoming digital asset tokenization platform.

The launch of Alloy by Tether aligns with Tether’s strategy to meet stablecoin compliance amid strict regulations imposed by various jurisdictions like the Markets in Crypto-Assets Regulation (MiCA) in the European Union and the Virtual Assets Regulatory Authority (VARA) in Dubai. By creating a stablecoin over-collateralized by gold, Tether aims to enhance trust and stability in its digital assets, adhering to the stringent requirements of major regulatory frameworks.

The tokenization of real-world assets, such as gold, has emerged as a significant trend in the Web3 space. Earlier this year, BlackRock launched the BlackRock USD Institutional Digital Liquidity Fund, allowing investors to gain exposure to cash equivalents like U.S. Treasury bills through digital tokens. As of now, the tokenization industry holds more than $4 billion in total value locked, according to DeFiLlama.