Tether Gold (XAU₮) has won Shariah certification, positioning the gold-backed token for wider use among Islamic banks, institutions and retail investors.
What happened
- On July 27, Tether announced that Amanah Advisors — a global Islamic finance advisory firm led by Mufti Faraz Adam — reviewed XAU₮ and found it compliant with core Islamic finance requirements.
- The assessment examined the token’s ownership model, reserve transparency, physical backing and whether the product involved riba (interest), leverage or speculative derivatives. Amanah concluded XAU₮ meets key Shariah criteria, including clear ownership of a real asset and the absence of interest.
How XAU₮ is structured
- XAU₮ is issued by TG Commodities, S.A. de C.V. Each whole token represents ownership of one troy fine ounce of gold allocated on a London Good Delivery bar kept in a Swiss vault — an arrangement that preserves a direct link between the token and physical bullion rather than a synthetic exposure.
Why the certification matters
- Shariah approval could open XAU₮ to halal savings products, institutional gold allocations, takaful (Islamic insurance), trade finance and collateralized lending — effectively broadening its addressable market in regions with strong demand for Shariah-compliant gold, such as the Gulf Cooperation Council, South Asia and parts of Africa.
- The token’s allocated-bullion model aligns with Islamic finance principles that require identifiable underlying assets and forbid interest and excessive uncertainty, offering a way to provide blockchain-based gold exposure without replacing physical gold with derivatives.
Regulatory context and market traction
- The certification complements another recent Middle East development: Abu Dhabi Global Market (ADGM) has recognized XAU₮ as an Accepted Spot Commodity, letting eligible firms in the financial center support the token once they obtain the necessary permissions. This recognition is not an automatic license to offer XAU₮; firms still need specific approvals and permissions.
- ADGM previously recognized Tether’s USDT under a separate category (Accepted Fiat Referenced Token), creating a regulatory pathway for both Tether’s dollar- and gold-backed assets within the Abu Dhabi financial center.
- On-demand adoption appears to be growing: data cited by crypto.news shows Tether Gold’s locked value rose from roughly $826 million to about $2.86 billion in the past year — a more than threefold increase — reflecting rising interest in tokenized bullion.
Caveats for investors
- The Shariah certification is an Islamic-compliance opinion and does not change XAU₮’s legal or regulatory status in jurisdictions like the United States. U.S. investors should treat the approval as an additional due-diligence signal about asset backing but must still assess custody, liquidity, redemption mechanics, counterparty risk and tax implications on their own.
- Wider institutional adoption will depend on local rules and whether financial firms secure the permissions required to offer or custody XAU₮.
Product expansion
- Tether is also expanding XAU₮’s utility. A partnership with Bitcoin lending firm Ledn is expected to allow eligible holders to use XAU₮ as collateral for loans, bringing liquidity use cases to the token while keeping its physical gold backing intact.
Tether’s view
- CEO Paolo Ardoino framed the Shariah certification as a bridge between longstanding demand for gold and modern blockchain infrastructure, saying the recognition could expand access to digital gold while aligning with principles followed by Islamic financial institutions.
Bottom line
Shariah certification and ADGM recognition strengthen XAU₮’s institutional narrative and could accelerate uptake in markets that prioritize Shariah compliance. However, practical adoption will hinge on regulatory permissions and ongoing due diligence by firms and investors.
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