By applying the technology and functionality of Tether’s world-leading fiat-backed stablecoins to physical gold, XAUt will dramatically mobilize gold markets, significantly lowering barriers to entry for non-institutional investors in the process. XAUt will mirror Tether’s existing products in many ways, but there are several important differences, including the creation of a new entity that will issue XAUt tokens, Tether Gold.

Each individual XAUt token represents 1 troy fine ounce of London Good Delivery gold held in a vault in Switzerland, and will be capable of being fractionalized up to six decimal places (i.e. increments as small as 0.000001 troy fine ounce).

Holders of XAUt will be able to redeem their tokens for the associated physical gold, subject to the payment of fees and minimum redemption requirements. The gold will be delivered at a location of the holder’s choosing in Switzerland. Rather than take physical delivery in Switzerland, a holder can ask Tether Gold to make arrangements to attempt to sell the gold and take the proceeds from that sale. Specific gold bars will be associated with each on-chain address that holds XAUt tokens. Tether Gold will make a “Look-up Website” available where anyone can identify the specific gold bar(s) associated with each on-chain address where XAUt tokens are held. When an on-chain transaction transfers XAUt from its initial on-chain address to a second on-chain address the physical gold associated with the XAUt held at each on-chain address will be reallocated by Tether Gold on behalf of the XAUt holders to attempt to minimize the number of physical gold bars associated with each address holding XAUt. This reallocation will happen instantly so that each XAUt token will always represent ownership of physical gold on a particular gold bar. In order to either purchase or redeem XAUt with Tether Gold, users will be required to complete an identity verification process, agree to a set of specific terms for service for XAUt and meet applicable purchase or redemption minimums.

XAUt tokens will initially be available on the ERC20 protocol, with others to follow. All purchases and redemptions will be in U.S. dollars. Tether Gold will purchase, or arrange for the purchase of London Good Delivery gold from a gold dealer in Switzerland, which will then be securely stored by a custodian in a vault in Switzerland. The gold will be held for the benefit of XAUt token holders, not for Tether Gold. The custodian maintains insurance with regard to its business in such amount and on such terms and conditions as it considers appropriate, which is not expected to cover the full amount of gold held for the benefit of XAUt token holders.