Tokenized Gold Stuck in the Slow Lane Amid Dollar Stablecoin Dominance

Tokenized gold has reached $6 billion in market capitalization and trading volumes are up 1,300% year-over-year in Q1, but it still can't compete with dollar stablecoins. The latter have a market cap of nearly $318 billion and settled more than $33 trillion on-chain in 2025, outpacing Visa and Mastercard combined.

The reason tokenized gold is struggling lies in its architectural design, which inherits the frictions of physical custody, slower audits, and thin liquidity. This makes it difficult to achieve composability, a key feature that rewards speed and network density.

Globally, central banks have been accumulating gold at an unprecedented rate, with 95% of respondents expecting global official holdings to rise in the next 12 months, according to the WGC Central Bank Gold Reserves Survey. The US dollar's share of global FX reserves has slipped to 56.9% from roughly 72% in 2001.

Paxos Gold (PAXG) and Tether Gold (XAUT) dominate the tokenized gold market, but their physical redemption requirements are steep, requiring a minimum of 430 tokens or $2 million at current prices. This excludes retail investors and highlights the custody constraint that physical gold does not scale like dollars.