1 Market Overview and Landscape

1.1 Rapid Growth of the Gold RWA Market by 2025

• In terms of market capitalization, the gold RWA market has nearly tripled this year. According to CoinFound data, as of December 19, 2025, the total market cap of gold RWAs has exceeded $3 billion. At the beginning of 2025, the overall market cap was even below $1 billion.

• In terms of participants, additionally, the number of gold RWA assets and supporting ecosystems has grown rapidly this year, with more and more institutions entering this market. Before early 2025, the gold RWA market was relatively quiet, with only XAUT (Tether Gold) and PAXG (Paxos Gold) playing prominent roles, while WTGOLD (WisdomTree Gold Token) was barely visible on the fringes.

• Currently, gold RWA assets are mainly distributed on the Ethereum blockchain.

1.2 Market Structure: XAUt and PAXG Competing, Emerging Growth Noteworthy

By 2025, the gold RWA market has evolved into a multi-polar distribution led by “dual giants and emerging players.” As of December 19, 2025, different mainstream protocols have formed distinct functional layers based on their positioning.

• XAUt (Tether Gold): Dominant in Liquidity and Derivatives

– Market Cap: Approximately $1.63 billion, maintaining the top position in the sector.

– Core Advantage: Leveraging Tether’s extensive stablecoin ecosystem, XAUt has the deepest liquidity and largest trading volume among gold RWAs.

– Use Cases: As the preferred collateral for centralized exchanges and on-chain derivatives protocols, it is highly suitable for high-frequency traders and institutions engaging in large-scale hedging.

• PAXG (Paxos Gold): Benchmark for Compliance and Regulation

– Market Cap: About $1.43 billion.

– Core Advantage: Strictly regulated by the New York State Department of Financial Services (NYDFS). Its unique “per-transaction query” mechanism allows users to perform real-time on-chain queries of gold bar serial numbers, purity, and physical weight via addresses.

– Use Cases: The preferred tool for traditional regulated financial institutions (Regulated Entities) for on-chain asset allocation.

• KAU (Kinesis Gold): Payments and Inclusive Finance

– Core Innovation: Introducing a “Gold Holding Yield” model, returning a proportion of network transaction fees to holders, breaking the traditional view of gold as a “non-productive asset.”

– Payment Ecosystem: By the end of 2025, market cap reaches $300 million. Utilizing debit card systems in over 40 regions to enable “gold spending,” transforming gold into a high-frequency circulating daily currency.

• XAUm (Matrixdock Gold): Yield-Driven and Flexible for Institutions

– Growth Momentum: Market cap surged from millions at the start of the year to over $60 million, leading growth rate in the sector.

– Technical Features: Employs a “dual-mode asset architecture,” supporting instant interchange between ERC-20 and ERC-721 (NFT). When holdings meet standard gold bar specifications (e.g., 1kg), they can be mapped to NFTs representing specific physical ownership rights.

– DeFi Engine: Deep integration with cross-chain communication protocols (e.g., Chainlink CCIP), enabling arbitrage opportunities across multi-chain ecosystems.

1.3 Increased Participation of Institutional Investors

• Entry and Productization by Financial Giants: Pilot programs by DBS (DBS) and Standard Chartered (SCB) under Singapore’s MAS (MAS) regulatory framework. By 2025, these traditional banks have launched cross-border settlement pilots based on gold RWAs. They utilize tokenized gold as a substitute for physical gold bars, reducing settlement times from days to minutes.

• Institutionalization of Custody Facilities: (1) Widespread adoption of multi-signature custody solutions: By 2025, institutional custody platforms like Fireblocks and Copper have integrated XAUt, PAXG, and XAUm. This allows family offices and hedge funds to operate “vault-level” custody via enterprise-grade interfaces compliant with SOC2 standards, without managing private keys directly; (2) Phemex institutional accounts: Phemex supports institutional investors with its API and sub-account systems, enabling direct use of gold tokens for cross-platform margin collateral, significantly improving capital efficiency.

• Mature Regulatory and Compliance Frameworks: (1) Impact of the US GENIUS Act: Passed in July 2025, the “Stablecoin GENIUS Act” provides clear legal definitions for physically-backed tokens (including gold tokens), greatly alleviating legal concerns for institutional entry; (2) Real-time Reserve Proof ###PoR###: Becoming an industry standard—by late 2025, major gold RWAs have integrated Chainlink PoR oracles. For example, PAXG and XAUm support 24/7 on-chain audits, allowing institutions to access snapshots of physical gold reserves held by custodians (e.g., Paxos Trust or partner banks like Matrixport) at any time.

( 2 Macro Perspectives and Trends

)# 2.1 Unstable Global Environment Continues to Drive Gold and Gold RWAs Upward

In 2025, the global macro environment exhibits high uncertainty.

• On one hand, debt pressures and fiat currency credit risks are rising. As public debt levels in major economies reach historic highs, investor confidence in sovereign credit and fiat currencies is weakening structurally. Market demand for non-debt assets hits a decade high in 2025.

• On the other hand, not only inflation risks but also escalating geopolitical conflicts increase macro instability. In this context, gold as a safe-haven asset becomes increasingly important. Gold prices continue to rise, hitting multiple record highs in 2025. This also drives up the prices of gold RWAs. In the short term, such a trend is expected to persist.

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)# 2.2 From Stablecoins to Payment and Other On-Chain Use Cases, Growing Demand for “On-Chain Gold”

With the development of stablecoins, on-chain financial assets in payment, trading, and settlement scenarios have been widely validated and are rapidly expanding. However, a noteworthy phenomenon is:

• Currently, mainstream stablecoins like USDC are backed by dollar cash equivalents and short-term US Treasuries, with total reserves just over $1 trillion, insufficient to support global-scale applications. If extended to include long-term US Treasuries or other risk assets, stablecoins would inevitably carry similar maturity and credit risks as commercial banks.

• Conversely, due to macroeconomic instability, diversification of underlying assets is crucial to maintain stability in payment, settlement, and future on-chain collateral scenarios. An example with ongoing interest is Tether (USDT), which has been increasing its holdings of gold and Bitcoin reserves, especially boosting gold reserves to enhance resistance against inflation and US debt credit risks.

In summary, the “on-chain financial world” currently needs “gold,” and with the growth of stablecoins and expansion into payment and settlement scenarios, this demand is increasing. However, physical gold and gold ETFs are insufficient to meet this demand:

1. “Physical form” greatly limits usability as a payment medium. In existing financial systems, gold lacks programmability, divisibility, and high-frequency liquidity, making it difficult to embed into modern financial networks, especially for cross-border payments and on-chain finance. Compared to fiat and digital assets like stablecoins, physical gold cannot be directly used for electronic settlement and lacks interaction with payment gateways, clearing networks, and smart contracts.

2. Similarly, while gold ETFs facilitate gold investment within traditional frameworks, their adaptability and flexibility are inadequate in the “on-chain” context, failing to meet the core requirements of a decentralized era for assets to be “highly active, callable, and composable.” Specifically, gold ETFs serve as a bridge between gold markets and financial markets, allowing investors to gain price exposure without holding physical gold. Yet, they are still products within traditional finance, as securities, unable to facilitate peer-to-peer transfers or real-time settlement, thus unsuitable for payments or integration into on-chain financial protocols.

3. Additionally, for investors, gold ETFs have a drawback: purchasing a gold ETF only grants a legal claim, not ownership of the physical gold itself. Essentially, it remains a “closed-end financial instrument.”

Therefore, the on-chain world needs “gold” in a form that matches its requirements, specifically:

• A trusted “asset component” form that provides a credible, stable, and composable value anchor for on-chain applications.

• A programmable and composable “gold” that can be flexibly integrated into DeFi lending protocols, liquidity pools, and yield aggregation mechanisms.

This creates a clear demand for gold RWAs.

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2.3 A New Generation of Financial Systems Is Coming, with Gold RWAs as a Key Component

In the US, the tokenization of financial assets is accelerating under regulatory support, and “asset tokenization” appears to be the next evolution of the financial system.

• In December 2025, the US Securities and Exchange Commission (SEC) issued a NoAction Letter to the Depository Trust & Clearing Corporation (DTCC) subsidiary DTC, authorizing it to provide tokenization services for certain real-world assets in a controlled environment. This authorization covers high-liquidity assets like US stocks, ETFs, and US Treasuries, opening a compliant pathway for traditional capital markets to go on-chain and indicating mainstream regulatory support for asset tokenization.

• Going further back, in late 2025, SEC Chair Paul Atkins publicly stated that “asset tokenization is the future trend of capital markets” and promoted discussions related to Project Crypto, including classification frameworks and regulatory applicability for tokenized securities.

• Even earlier, the passage of the GENIUS Act (2025) laid a legal foundation for the compliant use of stablecoins and on-chain assets.

Moreover, this trend is not limited to the US but is evolving into a global direction for the financial system.

• The Bank for International Settlements (BIS) in its 2025 Annual Economic Report outlined a framework for the “next-generation financial system” and asset structure: BIS explicitly states that the traditional financial system is transitioning from an architecture centered on accounts and centralized ledgers to a new paradigm based on tokenization and programmable platforms. BIS describes this system as a financial infrastructure operated by multiple types of tokenized assets, including:

1. Central bank reserve tokens (as the final settlement asset)

2. Commercial bank deposit tokens or regulated stablecoins (as payment and liquidity tools)

3. Tokenized government bonds and other high-quality assets (as safe assets and collateral foundations for financial markets)

• BIS emphasizes that the core value of tokenization is not merely “mapping assets onto blockchains” but integrating payments, clearing, settlement, and asset transfer into a unified, programmable infrastructure, significantly reducing cross-border transaction costs, shortening settlement cycles, and minimizing systemic friction. This aligns closely with SEC’s support for securities tokenization and DTCC’s push for on-chain clearing and settlement.

• Naturally, within this framework, real-world assets (RWAs) are viewed as a crucial bridge connecting the physical financial system with on-chain financial infrastructure. Among RWAs, gold holds a special position: as a globally recognized store of value, long-term safe asset, and high-quality collateral, it inherently meets BIS’s criteria for “highly credible, low-credit-risk assets.” When gold is introduced into the on-chain system as RWA, it can serve not only as a store of value but also participate in on-chain payments, clearing, collateralization, and cross-border settlement—core financial functions.

In summary, a new financial system is emerging, and within it, “gold” in RWA form is a vital component.

( 3 Uses of Gold RWA

)# 3.1 Programmable “Hedging Asset”

Gold has long been regarded as a globally accepted safe-haven asset and store of value. Gold RWAs introduce programmability and financial composability on this basis, bringing additional benefits:

1. Divisibility and composability: Gold can be granularly divided into minimal units, embedded into DeFi protocols, custody accounts, or institutional financial contracts;

2. Programmable rules: Smart contracts can set transfer, lock-up, liquidation, or trigger conditions, transforming gold from a “passively held asset” into an “actively participating financial logic asset”;

3. On-chain transparency: Custody, issuance, circulation, and redemption paths are verifiable on-chain, reducing reliance on centralized intermediaries.

A direct benefit of these features is that, while serving as a hedge, holders can also earn yields. For example, XAUm holders can participate in protocols like AlphaLend, Navi, Suilend to generate returns.

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3.2 Value Medium in Payments, Trading, and Cross-Border Payment Networks

Beyond inflation hedging and store of value functions, gold can also be embedded as a transaction medium and payment asset in future digital financial systems. For instance, with the rise of stablecoins and RWAs, gold tokens are expected to become a neutral payment interface linking on-chain finance and the real economy.

Specifically, the current stablecoin ecosystem is heavily dollar-centric, with underlying assets mainly US Treasuries. This structure enhances liquidity but also introduces geopolitical, regulatory spillover, and credit concentration risks. The emergence of gold tokens offers a systemic buffer. As global payment networks become more multipolar (e.g., mBridge, BRICS Pay, etc.), gold tokens have the potential to serve as “bridge-type settlement assets”:

• Not replacing sovereign currencies;

• But acting as a neutral interface between different currency systems and payment networks, reducing friction and political bargaining costs.

In this framework, gold RWAs play roles far beyond “investment assets,” evolving into institutional-level foundational components of the new global financial network. At this level, gold RWAs may not compete directly with stablecoins but instead complement their liquidity structure: stablecoins handle high-frequency circulation, while gold RWAs provide a low-credit-risk value base.

3.3 Core Collateral in On-Chain Clearing, Settlement, and Collateral Systems

• On one hand, in DeFi scenarios, gold tokens (like XAUT, PAXG) are increasingly viewed as “neutral collateral.” Unlike fiat stablecoins, gold does not depend on any single sovereign credit, with prices determined by global consensus, offering greater stability in extreme macro or geopolitical situations. This makes gold a valuable hedge in lending, synthetic assets, and structured protocols.

• On the other hand, in CeFi and derivatives markets, gold RWAs can drive structural innovations in margin systems. Leading platforms can support gold tokens as cross-currency collateral, enabling institutional investors to participate in leveraged trading and risk hedging directly with gold positions without converting to fiat or stablecoins. This mechanism effectively “releases gold capital efficiency”: gold is no longer just a passive asset but a continuously active liquidity unit in financial activities.

3.4 “Bridge Asset” Connecting Traditional and On-Chain Finance

From a systemic perspective, an important role of gold RWAs is lowering the entry barrier for traditional financial institutions into on-chain systems. For banks, asset managers, and clearinghouses:

• Gold is a familiar asset;

• Custody, auditing, and compliance pathways are relatively mature;

• Legal attributes are clear, with high cross-jurisdiction acceptance.

Thus, gold RWAs often serve as the initial entry point for institutions exploring on-chain assets, clearing, or collateralization—an important “transitional asset” for traditional finance to move toward tokenization.

4 Risks and Challenges

Despite the advantages of liquidity, capital efficiency, and systemic neutrality, gold RWAs as a hybrid form connecting real assets and on-chain finance face various structural risks and practical constraints. These risks do not negate their long-term value but must be systematically identified and assessed at this stage.

4.1 Centralization Risks

4.1.1 Physical Custody and Redemption Risks

The core premise of gold RWAs is the one-to-one correspondence between on-chain tokens and off-chain physical gold. This relationship critically depends on custodial institutions, vault operators, and redemption mechanisms, inherently introducing centralization and trust dependencies. Main risks include:

• Custody Concentration Risk: Most gold RWAs depend on a limited number of international vaults or custodians. Operational disruptions, legal disputes, or extreme political events could impair redemption capabilities;

• Redemption Frictions: Physical redemption often involves minimum quantities, geographic restrictions, and time delays, partially offsetting the “instant” nature of on-chain assets;

• Liquidity Disruptions in Extreme Scenarios: During systemic crises or regulatory conflicts, on-chain tokens may remain tradable, but physical delivery could be restricted, creating a mismatch between “nominal liquidity” and “real liquidity.”

Thus, while enhancing financial usability, the security of gold RWAs heavily relies on the robustness and legal enforceability of custodial systems.

4.1.2 Operational and Transparency Risks

The value of gold RWAs depends not only on the gold itself but also on market trust in issuers, custodians, and audit mechanisms. Potential risks include:

• Insufficient audit frequency and depth: Some projects provide reserve proofs but with long audit cycles or lacking real-time verification, challenging institutional risk management;

• Information asymmetry: Custody details, redemption terms, and legal structures are often dispersed across multiple documents, making comprehensive assessment difficult for ordinary users;

• Reputational spillover: Any credit event involving a gold RWA project could negatively impact the entire sector, affecting market acceptance.

At this level, gold RWAs resemble “financial infrastructure-grade products,” with success heavily dependent on long-term reputation rather than short-term market fluctuations.

4.2 Technical Risks: Systemic Challenges in On-Chain Finance

Although based on mature public blockchains, the technical stack of gold RWAs typically involves smart contracts, cross-chain bridges, oracles, and custody interfaces, making overall security dependent on the weakest link.

Key technical risks include:

• Smart contract vulnerabilities: Flaws in minting, burning, mapping, or cross-chain logic could lead to asset freezes, mismatches, or malicious exploits;

• Cross-chain and interoperability risks: Cross-chain bridges are common points of failure; if gold RWAs become cross-chain assets, systemic risks increase;

• Oracle and data synchronization issues: Delays or errors in on-chain price, status, or reserve data could trigger cascaded liquidations or market distortions.

Unlike native crypto assets, technical risks in gold RWAs can propagate through collateral, liquidation, and payment systems, affecting broader financial protocols and posing systemic externalities.

4.3 Regulatory and Legal Uncertainty Risks: Long-term Cross-Jurisdictional Variables

Gold RWAs sit at the intersection of commodities, securities, payment tools, and digital assets, with regulatory classifications varying significantly across jurisdictions, creating long-term uncertainties. Main aspects include:

• Legal classification inconsistencies: Gold tokens may be regarded as commodity tokens, security tokens, or payment instruments depending on the country, with differing compliance regimes;

• Cross-border compliance complexity: Gold RWAs are inherently cross-border, but actual regulations on foreign exchange, precious metals, and AML often follow territorial principles;

• Policy pace variability: Even in major markets like the US and EU, regulatory attitudes and enforcement can change periodically.

This suggests that, in the short term, gold RWAs are more suitable for institutional pilots, sandbox experiments, and limited-scale applications rather than unrestricted global deployment.

Risk Warning

This report is based on publicly available information, industry interviews, third-party research, and reasoned analysis, aiming to explore the development trends and potential impacts of gold RWAs. Due to the evolving market environment and disclosure limitations, conclusions may carry significant risks and uncertainties, which are highlighted here:

1. Data Completeness and Statistical Method Risks

Gold RWAs are in rapid development; market size, circulation, and use cases data mainly come from project disclosures, on-chain analytics, and third-party research. Different sources may have discrepancies in scope, methodology, and timing. Some data may be lagging, estimated, or incomplete.

2. Asset Custody and Redemption Risks

The value of gold RWAs depends on the actual existence of physical gold, compliant custody, and enforceable redemption arrangements. While most projects incorporate third-party custody and audits, extreme market volatility, legal disputes, or jurisdictional conflicts could still cause redemption delays, liquidity issues, or delivery mismatches.

3. Technical and Systemic Operation Risks

Gold RWAs rely on smart contracts, blockchain infrastructure, cross-chain protocols, and oracles. Their security depends on multiple layers; vulnerabilities in any component could lead to asset freezes, mismatches, or systemic failures, with potential external spillovers.

4. Regulatory and Legal Environment Risks

Given their cross-category nature, gold RWAs face uncertain regulatory treatment across jurisdictions. Changes in classification, enforcement, or policy could impact issuance, circulation, custody, and usage.

5. Market Liquidity and Price Volatility Risks

Although gold itself is a stable store of value, the secondary markets for gold RWAs are still immature. Liquidity depth, participant structure, and price discovery mechanisms are developing, and prices may deviate from underlying asset values under certain conditions.

6. Assumptions and Forward-Looking Risks

Analyses in this report are based on current trends, technological paths, and policy directions; unforeseen macroeconomic, technological, or regulatory changes could alter these trajectories, leading to different outcomes.

7. This Report Does Not Constitute Investment Advice