USDT-issuer Tether has taken a fresh initiative to drive the real-world utility of tokenized gold via traditional payment cards. On Wednesday, Tether announced that it has partnered with Fasset to bring its gold-backed stablecoin XAUT onto Visa cards. The announcement claimed that this would be the world’s first gold-backed neobanking Visa card.
The card would essentially allow its holders to use their XAUT tokens to make purchases at Visa-accepting stores. At the time of billing, the card would instantly convert XAUT into USDT and eventually the local currency to complete the transaction. On eligible transactions, spenders will also be able to earn upto six percent cashback in the form of the XAUT token.
While Visa would be providing its expansive payment network to this card, Fasset will process multi-currency settlements with its off-ramp services. Founded in 2019, the London-Dubai-based startup that offers digital banking and investment services like making payments and investing.
Commenting on the development, Paolo Ardonio, the CEO of Tether said that the move would establish gold as a medium of exchange beyond its reutation as just a store of value.
“Through this initiative, we are connecting stablecoins and tokenized gold to real-world payment systems,” Ardonio said. “We are giving users the option to hold gold and invest it however they choose, without friction or borders.”
Tether eyes retail space for XAUT
After grabbing the lion’s share of the USD-dominated stablecoin market with USDT, Tether launched its gold-pegged stablecoin XAUT in 2020. Each token of the XAUT is backed by one troy ounce of real gold or 31.1 grams which, at the time of writing, was priced at around $4,450 to $4,475.
With this, Tether brought gold on-chain, the process that is referred to as “tokenization”.
The El Salvador-headquartered company claims that the market cap of tokenized digital gold is over $5.3 billion, with XAU₮ accounting for over $2.6 billion. It maintains that the demand for digital assets that offer opportunities in investments and usability is on the rise, making it the right time to push XAUT into mainstream adoption.
People around the world are already familiar and comfortable with using Visa cards for daily spending and now they would be able to tap into the same ease for utilizing their XAUT holdings.
In order to incentivize XAUT holders using the token on retail spending, Tether said, Visa purchases via this card will automatically auto-invest the spare change from every transaction into XAU₮ enabling continuous passive gold accumulation.
The reaction to Tether bringing tokenized gold to Visa appears to be quite optimistic on social media.
Fasset said it plans on making the XAUT the most widely held digital gold in emerging markets through this initiative. For the company internally, a partnership with the stablecoin giant, also positions it higher up on the competition ladder against other off-ramp providers.
“This isn’t just a card – it enables the adoption of digital gold at scale through Fasset’s extensive distribution network,” said Mohammad Raafi Hossain, CEO and Co-Founder of Fasset.
Data by CoinMarketCap showed on Wednesday that over 54,800 investors hold XAUT with the token’s total value locked at $3.17 billion. Tether has capped XAUT’s total supply at over 707,700 tokens — adding to its rarity quotient. Out of the total, over 612,800 tokens are already in circulation.
The PAX Gold (PAXG) stablecoin, issued by Paxos Trust Company, is among XAUT’s biggest competitors. As of now, the token is not natively supported as a direct spending currency on any Visa or Mastercard debit or credit card. The token has over 89,600 holders. Over 460,900 PAXG tokens are currently in circulation as per CoinMarketCap.