5 Criticisms and Limitations of Tether Gold (XAUT)

5 Criticisms and Limitations of Tether Gold (XAUT)

While Tether Gold has gained popularity among investors, it is not without its criticisms and limitations. In this article, we will explore five of the most common criticisms and limitations of Tether Gold. I may add that despite the volatility of the crypto market, you can still remain on the safe and profitable side if you trade in the right way. Whether you’re new to trading or seasoned trader, platforms like be really helpful in advanced crypto trading experience. Now let’s get back to the topic!

1. Limited Transparency and Auditability

One of the major criticisms of Tether Gold (XAUT) is the limited transparency and auditability of its operations. Tether, the company behind XAUT, has been accused of lacking transparency in their operations, and this has led to concerns about the legitimacy of their claims of having 100% gold backing for XAUT.

Tether’s lack of transparency has also led to doubts about the true amount of gold backing XAUT. While Tether claims that each XAUT token is backed by one troy ounce of gold, there is no way for investors to independently verify this claim. Additionally, Tether has not provided any details about the location, storage, or security of the gold reserves that are supposedly backing XAUT.

This lack of transparency and auditability is a major concern for investors who are looking to invest in gold-backed cryptocurrencies like XAUT. Without a clear understanding of the underlying assets and operations of the company, it is difficult for investors to assess the true value and risks associated with XAUT.

2. Centralization and Counterparty Risk

One of the main criticisms of Tether Gold (XAUT) is the issue of centralization and counterparty risk. Tether, the company behind XAUT, acts as the custodian of the physical gold that backs the cryptocurrency. This means that investors who hold XAUT are relying on Tether to properly store and manage the gold.

This centralization creates a counterparty risk for XAUT holders, as the value of the cryptocurrency is directly tied to the performance and trustworthiness of Tether. If Tether were to suffer financial difficulties, it could impact the value of XAUT and potentially lead to a loss for investors.

3. Regulatory Issues

One of the major criticisms of Tether Gold (XAUT) is its lack of clear regulation. While Tether claims that each token is backed by physical gold held in a Swiss vault, there is no clear regulatory oversight to ensure this is true. Additionally, Tether’s history of legal and regulatory issues with its stablecoin, USDT, raises concerns about the trustworthiness of the company.

In 2019, the New York Attorney General’s office accused Tether of covering up the loss of $850 million in customer funds. This has led to questions about the company’s transparency and ability to operate in a compliant and ethical manner. As a result, many investors and regulatory bodies remain cautious about investing in Tether Gold and other Tether products.

4. Competition

One of the criticisms and limitations of Tether Gold (XAUT) is the increasing competition it faces from other gold-backed stablecoins. The emergence of other gold-backed stablecoins like PAX Gold (PAXG) and Digix Gold (DGX) has created more options for investors who want to hold gold in a digital form. These stablecoins offer similar features as Tether Gold (XAUT) but with different approaches to custody, auditing, and fees.

Furthermore, traditional gold investment options like ETFs and futures contracts are also potential competitors for Tether Gold (XAUT). These traditional options have been in existence for a longer period, and investors may prefer them due to their more established reputation and regulatory oversight.

5. Limited Use Cases

Another criticism of Tether Gold (XAUT) is its limited use cases compared to physical gold. While physical gold can be used in a variety of industries and applications such as jewelry, electronics, and medicine, Tether Gold (XAUT) is primarily used as a store of value and a trading instrument in the crypto market. As such, it may not have the same level of demand and value as physical gold, which has a wide range of practical applications. Additionally, the limited use cases of Tether Gold (XAUT) may make it more vulnerable to market fluctuations and changes in demand.

Moreover, Tether Gold (XAUT) is still a relatively new product, and it remains to be seen whether it will gain wider acceptance and adoption in the market. It may face competition from other gold-backed stablecoins or digital assets that offer more versatile use cases or innovative features.


In conclusion, Tether Gold (XAUT) has its fair share of criticisms and limitations, as with any investment or financial asset. While the asset provides certain advantages, such as its accessibility and ease of use, there are also notable downsides to consider. These include limited transparency and auditability, centralization and counterparty risk, regulatory issues, competition, and limited use cases.

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About the author



Tom is a gizmo-savvy guy, who has a tendency to get pulled into the nitty gritty details of technology. He attended UT Austin, where he studied Information Science. He’s married and has three kids, one dog and 2 cats. With a large family, he still finds time to share tips and tricks on phones, tablets, wearables and more. You won’t see Tom anywhere without his ANC headphones and the latest smartphone. Oh, and he happens to be an Android guy, who also has a deep appreciation for iOS.