Tether Accumulates 140 Tonnes of Physical Gold in Swiss High-Security Vault

Tether, the issuer of the world's most widely used stablecoin by market capitalisation, has been accumulating physical gold at a rate of up to two tonnes each week, building one of the largest privately held bullion reserves globally.

Chief executive Paolo Ardoino confirmed the purchases will continue at this pace for several months. At present valuations, the weekly acquisitions represent expenditure exceeding one billion dollars monthly.

The bullion is transported to a reinforced underground facility in Switzerland, previously used as a nuclear shelter. Ardoino characterised the location as resembling a setting from espionage fiction.

Tether's gold inventory now stands at approximately 140 tonnes, valued at roughly 24 billion dollars. This positions the firm among the most substantial non-governmental holders of gold, trailing only sovereign states, monetary authorities and large exchange-traded funds. The majority of this stockpile represents the company's internal treasury holdings, whilst a portion backs XAUT, its gold-linked digital token. XAUT currently maintains a market capitalisation of 2.7 billion dollars, according to data aggregators.

The rate at which Tether is acquiring gold has outstripped the quarterly purchases made by nations including Greece, Qatar and Australia. During the final quarter of 2024, the company added 27 metric tonnes to its bullion exposure.

Ardoino stated in company communications that operating at such scale places significant responsibility on the firm. He suggested that XAUT exists to offer clarity during periods when trust in traditional monetary frameworks is eroding.

Björn Schmidtke, chief executive of Aurelion, which manages Tether's gold treasury operations, argued that much of the ambiguity in gold investment stems from exchange-traded funds and similar instruments. He described these as "paper gold", noting that investors typically lack knowledge of which specific bars underpin their holdings.

Schmidtke estimated that approximately 98 per cent of gold investment occurs through financial products that do not guarantee ownership of identifiable physical bars. He warned that during market stress, such structures could face strain if large-scale redemptions were triggered simultaneously. Tokenised gold, he contended, removes bottlenecks in delivery and provides verifiable proof of ownership.

Gold has risen more than 90 per cent over the past year, now trading near 5,260 dollars per troy ounce. Analysts at Jefferies have suggested that Tether's purchases contributed to upward price pressure, though central bank activity has also been significant. Poland, Kazakhstan, Brazil and Azerbaijan were among the most active sovereign buyers of gold in the previous year, according to the World Gold Council.

Ardoino suggested that some of this sovereign accumulation may anticipate the potential introduction of gold-backed digital instruments by foreign governments, possibly intended to challenge the dominance of the US dollar in international settlement.

Several member states of BRICS, an intergovernmental grouping, have been net buyers of bullion. Russia, however, has reduced its gold reserves, likely due to the financial demands of its ongoing military conflict.

Industry Impact and Market Implications

Tether's aggressive accumulation of physical gold represents a notable shift in the composition of stablecoin issuer reserves. Historically, dollar-pegged stablecoins have been backed primarily by US Treasury securities and cash equivalents. The diversification into bullion signals a broader strategy to hedge against fiat currency volatility and align with sovereign-level asset management.

The scale of Tether's purchases places the firm in direct competition with nation-states in terms of buying volume, potentially influencing global gold pricing dynamics. As one of the largest non-state holders, Tether's continued accumulation could contribute to sustained upward pressure on spot prices, particularly if other institutional players follow similar strategies.

For the tokenised asset sector, XAUT's positioning as a provably backed gold instrument may set a precedent for transparency standards. If tokenised commodities gain traction as an alternative to exchange-traded funds, the model could extend beyond gold to other physical assets, reshaping how digital tokens interact with traditional commodity markets.

Regulatory scrutiny of stablecoin reserves remains elevated across multiple jurisdictions. Tether's emphasis on physical asset backing, stored in jurisdictions with strong property rights and vault security, may serve as a strategic response to calls for greater transparency and auditability in reserve composition.

The convergence of sovereign gold buying and private sector accumulation by crypto-native firms also reflects broader geopolitical trends. As central banks in emerging economies diversify away from dollar-denominated assets, digital instruments backed by commodities could emerge as tools for international settlement outside traditional correspondent banking systems.

From an infrastructure perspective, the Swiss vault arrangement highlights the importance of custodial security and jurisdictional choice in the storage of tokenised commodity collateral. The use of high-security facilities previously repurposed from Cold War-era infrastructure underscores the physical requirements of bridging digital and tangible asset classes.