Tokenized Gold Gains Traction in Crypto Lending

Tokenized gold has become increasingly popular as collateral in crypto lending, according to Arch Lending. The company reports that its Himanshu Sahay said investors are using tokenized gold as a way to put their assets to work within the broader crypto financial system.

Aave's XAUT-backed debt reached a $25 million ceiling in January and was fully used before additional capacity filled within 24 hours. Arch now accepts PAXG and XAUT as collateral for loans at up to 75% LTV, with Anchorage Digital holding the pledged tokens.

Sahay said that borrowing against tokenized gold allows investors to access liquidity while retaining exposure to the underlying asset. He cautioned that digital access does not remove the dangers created by debt, and lending services still need suitable LTV limits, custody arrangements, and risk controls.