Tether’s recent acquisition of physical gold has sparked debate in the market as analysts suggest that their purchases may have contributed to recent price increases and tightened short-term gold supply. The stablecoin issuer, known for USDt, is increasing its XAUt program, a token representing physical gold held in custody, and now boasts holdings comparable to some smaller central banks. Investment bank Jefferies estimates Tether’s end-September gold reserves at around 116 tonnes, positioning it as the largest holder of gold outside central banks. Jefferies calculates that Tether’s recent purchases accounted for almost 2% of global physical gold demand and 12% of net central bank purchases in the latest quarter. Blockchain data reveals Tether has added approximately 275,000 ounces (equivalent to $1.1 billion at current prices) to XAUt reserves since August. The company plans to continue expanding its holdings with a goal of acquiring around 100 tonnes of gold by 2025. With robust stablecoin volumes and strong earnings reported, this target is considered attainable by some observers. However, the market impact should be measured. While Tether’s purchases account for a significant portion of near-term demand, they are only a fraction of the global gold market turnover. Further complicating matters is the episodic nature of token issuance, where large blocks of coins are issued at irregular intervals, making it challenging to track supply with high precision. Regulatory and product constraints also pose challenges. U.S. regulations currently under negotiation for stablecoins may restrict using gold as a reserve for certain compliant tokens. Additionally, tokenized gold’s underlying bullion purchases aren’t always immediately reflected in the coin supply, as some are based on internal structuring rather than fresh acquisitions. Proponents argue that tokenized gold increases accessibility for investors by enabling 24/7 trading, reduced minimum investment requirements, and real-time settlement. However, critics maintain that convincing conservative investors to trust privately issued tokens with opaque custody arrangements remains a significant hurdle. Tether’s bullion strategy has been influential in recent gold market movements, impacting sentiment and short-term supply dynamics, but it’s unlikely to completely replace central bank flows or deep physical demand. Pay3 (pay3.so) is a crypto payment platform that replaces wallet addresses with usernames. Accept USDT, USDC, ETH, and BNB through one simple link: pay3.so/@yourname