As gold prices climb and confidence in fiat currencies is tested, Tether’s latest gold launch highlights the gap between tokenisation as a technical solution and the deeper economic forces that determine what people actually use as money.
Tether has unveiled Scudo, a new unit of account for its gold-backed token Tether Gold (XAU₮), as the stablecoin issuer looks to lower the practical barriers to using gold as a transactional asset in a digital economy.
Announced on January 6, Scudo represents one thousandth of a troy ounce of gold, allowing XAU₮ balances to be priced and transferred in smaller, more intuitive denominations. The move does not alter the structure or backing of Tether Gold, which remains fully backed by physical bullion held in secure vaults, but introduces a simplified way to express gold value on-chain.
The launch comes amid renewed global interest in gold, with prices reaching record highs in 2025 as investors respond to persistent inflation concerns, geopolitical uncertainty and sustained central bank buying.
Some analysts argue that the significance of Scudo lies less in its potential as a payment mechanism and more in what it reveals about broader confidence in fiat currencies.
Speaking to Payment Expert, Lex Sokolin, managing partner at Generative Ventures, says it remains unlikely gold will return as a unit of account for everyday commerce in the near term, regardless of how finely it is denominated.
“While I think it unlikely that gold will be used as a unit of account for commerce any time soon,” Sokolin says, adding that the move should instead be viewed through a monetary lens.
“Forcing the conversion of the dollar into gold denomination shows just how much of its value is being inflated away or undermined through protectionism and currency devaluation.”
Sokolin compares the approach to how crypto markets have historically expressed prices in Bitcoin terms to highlight similar dynamics, noting that gold has regained relevance as an inflation narrative.
“Crypto investors like to talk about the dollar in Bitcoin-denominated terms to show a similar effect,” he said. “But as Bitcoin struggles to appreciate currently as an inflation hedge, gold is relevant again to perpetuate the narrative.”
Gold as money, before finance went digital
For much of recorded economic history, gold functioned directly as money. From ancient trade routes to medieval marketplaces, gold coins were widely accepted because of their durability, scarcity and intrinsic value. Unlike modern fiat currencies, their worth did not depend on the credibility of a central issuer.
That role began to change in the 19th and early 20th centuries with the formalisation of the gold standard, under which national currencies were pegged to fixed quantities of gold. While this system preserved gold’s monetary anchor, it gradually removed the metal itself from day-to-day circulation. By the time the gold standard was abandoned entirely in the 20th century, gold had largely retreated from commerce into vaults, reserves and investment portfolios.
In practice, gold’s decline as a payment instrument was driven by logistics. Transporting, dividing and securing physical gold proved increasingly impractical as economies scaled and transaction volumes grew. Fiat money, and later electronic payments, offered speed and convenience which bullion could not.
Digitising gold, but with friction
Blockchain-based gold tokens such as XAU₮ attempt to address those historical limitations by making gold digitally transferable while retaining physical backing. Yet even in tokenised form, gold has struggled to function as a transactional unit.
One of the key obstacles has been denomination. Gold is priced in troy ounces, and at today’s valuations even small purchases translate into long decimal fractions. That complexity has limited its usability outside investment or settlement contexts.
Scudo is designed to address this problem by introducing a human-scale unit of account, comparable to the use of cents in fiat currencies or satoshis in Bitcoin. By allowing users to price goods and services in whole or partial Scudo units, Tether is attempting to make gold-backed value easier to reason about in everyday digital transactions.
Payments ambition, not just product design
In announcing the move, Tether framed Scudo as part of a broader effort to modernise access to traditional stores of value through blockchain infrastructure. The company has increasingly positioned itself not only as a stablecoin issuer, but as a payments and financial infrastructure provider, particularly in emerging markets.
This ambition aligns with Tether’s parallel investment in wallet tooling, including its Wallet Development Kit, which is designed to support self-custodial payments across multiple assets, including gold-backed tokens, fiat-pegged stablecoins and Bitcoin.
From a payments perspective, Scudo can be read as an attempt to improve user experience rather than to create a new asset class. It does not resolve deeper questions around merchant adoption, regulatory treatment or the volatility of gold prices in transactional settings.
That distinction is central to how payments specialists view the announcement. Simon Taylor, head of market development at Tempo and founder of Fintech Brainfood, says changing the unit of account does little to alter gold’s fundamental limitations as a payment instrument.
“Changing the unit of account for a gold-backed token doesn’t fundamentally alter the instrument’s utility in modern payments,” Taylor says. “For high-volume, low-latency transactional use cases like merchant payments, the structural friction of gold, even when tokenised, remains too high compared to stablecoins or other fiat-based payment types.”
Taylor adds that gold’s strength continues to lie in its role as a store of value and a settlement asset, a function widely used by institutions and central banks today.
However, he notes tokenisation could still broaden access, particularly for users in emerging markets. “Gold is not easily available to consumers in the global south who only have a mobile phone and an internet connection, which happens to be Tether’s core customer segment,” he says.
“So will gold’s role in payments change? Probably not. But will gold become more widely available because it is fractional and digital? Yes. Representing gold digitally is no different in principle to the receipts the first banks issued for storing gold centuries ago, just with better technology.”
Others remain more sceptical that tokenisation meaningfully changes gold’s role in the financial system. Adrian Ash, head of research at BullionVault, tells Payment Expert that tokenised gold has repeatedly struggled to gain traction, in part because it introduces new layers of complexity for investors who typically seek certainty and reassurance from physical ownership.
“It’s not always clear what you actually own when you buy a digital token ‘backed’ by a physical asset,” Ash says. “Do you own the crypto, or do you own the gold? That distinction matters if ownership ever needs to be asserted in a legal dispute.”
Ash also points to transparency and verification as persistent concerns across the gold token market, noting that while many projects offer on-chain look-up tools, independent confirmation of vault holdings, bar quality and total issuance remains difficult for users to assess.
More fundamentally, he questions whether enabling gold to be ‘spent’ changes its monetary function at all. “Tether’s pitch doesn’t make gold into money any more than a share of a mining company does,” Ash says. “It still defers to fiat currency as the arbiter of value.”
From a behavioural standpoint, Ash adds that history suggests savers are reluctant to spend assets they perceive as stable or appreciating. “Once people hold gold, they are far more likely to spend the currency they also hold,” he says, referencing Gresham’s Law, which holds that ‘bad money drives out good’.
