A gold-backed token looks like a simple instrument: one unit, one troy ounce, a bar in a vault somewhere. The question a general counsel or treasurer needs answered is narrower: if the issuer fails, if a bank in the chain fails, or if you simply want the gold, what do the token's own terms say happens next? The answer differs by product, and each issuer has written it down. Nothing here is investment, tax, legal or accounting advice, and this piece does not discuss prices.

Allocated and unallocated gold

Paxos's terms for PAX Gold (PAXG) define the two states. Allocated gold is "a specific gold bar held in an LBMA-approved security carrier vault, identifiable by a unique serial number, weighting and purity percentage." Unallocated gold is "gold deposits held by an LBMA-approved institution, which is a liability of such institution whereby the holder of unallocated gold owns a claim to an equivalent balance of gold." The first is a bar; the second is a claim on an institution's balance sheet. The same distinction runs through equities, covered in what the holder of a tokenised stock actually owns.

Both issuers describe their backing as allocated metal held apart from their own assets. Paxos's terms say PAXG tokens "represent fractional ownership of London Good Delivery gold bars, which are held by Paxos Trust on a segregated basis." Tether Gold's reserves report states that its gold reserves "are owned by the XAU₮ token holders, not by the Company." How those statements would be treated in an insolvency is a legal question for the holder's own counsel.

The London Bullion Market Association's Good Delivery standard sits upstream of both. Under its Responsible Sourcing Programme, refiners on the Good Delivery List must undergo an independent third-party audit every 12 months, following the five-step due diligence framework in the OECD Guidance. That audit concerns how a refiner sources metal. It says nothing about the custody arrangement an issuer builds around the bar.

Two products, read from their own documentation

PAX Gold

According to its terms, last modified on 12 December 2025, PAXG is managed by Paxos Trust Company, NA, and "Paxos Trust issues PAXG pursuant to specific approval from the OCC", the US Office of the Comptroller of the Currency. The gold is held in LBMA-approved security carrier vaults. In August 2026, blockchain.news reported that Paxos had replaced a system that recomputed bar allocations for all holders every two hours with one that maps tokens to specific bars in real time.

The terms also allow a holder with a Loco London unallocated gold account to convert PAXG into unallocated gold rather than take a bar. That route carries a stated risk: balances move "subject to the Clearing Bank's solvency and ability to perform a transfer," and "Paxos is not responsible for any losses associated with any default by a Clearing Bank."

Tether Gold

Tether Gold (XAU₮, often written XAUT) is issued by TG Commodities, S.A. de C.V., a company incorporated in El Salvador. Its Relevant Information Document, dated 27 January 2025, says it obtained authorisation as a stablecoin issuer under Article 5 of El Salvador's Regulations for the Issuance of Public Offerings of Stable Coins, and that its tokens are registered with the National Commission of Digital Assets (CNAD). The same document adds that this registration "does not imply certification regarding the quality of the token or the solvency of Tether Gold."

The document says the gold reserves are held by a custodian in a vault in Switzerland, and that the custodian "is a Swiss entity, which is a related party to Tether Gold." Holders can look up the specific bars their tokens are allocated to.

Redemption: minimums, delivery and fees

A London Good Delivery bar is not a fixed weight: LBMA's technical specifications allow between 350 and 430 fine troy ounces. That is why both issuers pin their bar redemption threshold at 430 tokens.

  • PAXG. The terms state: "You must redeem a minimum of 430 PAXG tokens plus the fee" for a London Good Delivery bar. They also provide for converting PAXG to US dollars against a streaming price quote, with no bar-sized minimum stated, and note that a conversion can take "up to several business days" to show in the account. A monthly charge of US$2 applies to an account with a non-zero balance and no issuance or redemption activity for twelve months or longer. Paxos may also charge storage fees by issuing new PAXG to itself, diluting existing holders, with the methodology published at least 30 days before such fees start.
  • XAUT. The Relevant Information Document sets a minimum purchase of 50 XAU₮ and allows redemption only in full bars. Because bars "usually range in size from ~385 to ~415 fine troy ounces," holders are generally asked to deposit at least 430 tokens, and tokens beyond the bar's actual content are returned. Purchase and redemption each carry a fee, 25 basis points at the document's date. Delivery is only within Switzerland, at the holder's cost, and onward transport is the holder's responsibility. Instead of delivery, a holder can ask Tether Gold to attempt to sell the bar in the Swiss gold market and pay out US dollars, less the same fee. A USDT150 verification fee applies to new applicants. It is non-refundable but, once verification succeeds, is credited back for use on redemptions.

Both sets of terms can change. The Tether Gold figures above are as stated in a document dated January 2025, and the Paxos figures are from terms dated December 2025.

Attestations: what gets checked, and as of when

Paxos says it publishes PAXG attestation reports each month. Reports posted on or after 28 February 2025 are issued by KPMG LLP, and earlier reports were prepared by WithumSmith+Brown.

The most recent Tether Gold reserves report is as at 30 June 2026. BDO Advisory Services S.r.l. signed it in Milan on 31 July 2026 after a reasonable assurance engagement under ISAE 3000 (Revised). Management asserted that the custodian held 707,747.139 fine troy ounces against 707,747.090000 XAU₮ tokens in circulation. The report adds a detail worth reading: of those tokens, 612,823.660000 had been sold and 94,923.430000 were minted but held as available for sale by an affiliate. BDO's opinion "is limited solely to the TGRR and the corresponding assets and liabilities as of 30 June 2026," and "activity prior to and after this time and date was not considered."

Both kinds of report confirm a balance at a point in time. What that can and cannot establish is covered in what proof of reserves actually proves.

Regulatory status

El Salvador's registration of Tether Gold is a current authorisation under a regime in force, though the issuer's own document says it does not certify the token's quality or the issuer's solvency.

In the United States, neither of this year's main federal statements deals specifically with gold tokens. The Statement on Tokenized Securities of 28 January 2026 is a staff statement from three SEC divisions. It says it "has no legal force or effect," covers securities formatted as crypto assets, and does not mention gold or commodities. On 17 March 2026, the SEC and CFTC issued a joint interpretive release at Commission level, not a rule, setting out five categories of crypto asset. According to Sullivan & Cromwell's summary, it does not specifically address commodity-backed or gold-backed tokens.

In the European Union, MiCA's rules for asset-referenced tokens have applied since 30 June 2024, and the European Banking Authority states that issuers of such tokens must hold the relevant authorisation to operate in the EU. Neither Paxos's PAXG terms nor TG Commodities' Relevant Information Document, as reviewed here, states that the issuer holds that authorisation. How a single-commodity token is classified, and whether it can be offered to EU customers, is a question for a compliance team's own counsel.

A short checklist

In Paris in June 2026, the Hecto Main Stage hosted "The Tokenisation of Everything: RWAs, Institutions, and the Next Market Structure," moderated by Yana Prikhodchenko. For gold, the operative detail sits in each issuer's documents rather than on a panel. The wider operational requirements for any tokenised asset are set out in what production-grade RWA tokenisation actually requires. For gold, the list is short: know whether the claim is allocated or unallocated, know the vault and the custodian, know the redemption minimum and who pays for delivery, check the date on the latest attestation, and read its scope limits before relying on it.