The stablecoin issuer’s tokenized gold product is valued at $2.5 billion.
Elemental Royalty signaled on Tuesday that investors will be able to receive dividends in the form of Tether’s XAUT, establishing a novel use case for tokenized gold on Wall Street.
The move is aimed at providing investors with direct ownership of physical gold, stemming from investments in gold royalties, the Colorado-based firm said in a press release. In total, investors are expected to receive a 12 cent dividend across several quarterly payments.
The company’s investors can still receive distributions in cash, as is traditional. But Elemental CEO David Cole described the company’s support of Tether’s product as innovative.
“The decision to offer investors a dividend in kind, in the form of Tether Gold, further differentiates Elemental as a forward-thinking, growth-oriented investment,” he said.
Elemental’s stock price fell 7.8% on Tuesday to $19.41, according to Yahoo Finance. The firm makes money by acquiring royalties tied to mining projects. Elemental said its approach avoids risks associated with owning and operating a mine, while maintaining the upside.
Tether’s legacy was built on tokens pegged to the U.S. dollar, but the stablecoin issuer has embraced tokenized gold as the precious metal’s price has surged 66% over the past year. Meanwhile, XAUT’s market capitalization has swelled to $2.5 billion from $714 million.
Earlier this month, the token’s total value peaked at $3.5 billion, according to CoinGecko, as the price of gold rose to new highs.
In January, YouTube rival Rumble said that it had adopted XAUT as a medium of exchange on its platform, allowing users to tip the token to creators alongside Bitcoin and Tether’s flagship stablecoin, USDT. To bolster the token’s use in payments, Tether also introduced the term Scudo, which represents 1/1,000th of a troy ounce of gold and its XAUT token.
Those moves were focused on consumers, but Elemental shows how tokenized gold can be used as a tool in real-world corporate finance, according to Tether CEO Paolo Ardoino.
“This marks a major step forward for the gold industry and shows how tokenized assets can unlock new financial models that were previously out of reach,” he said in a press release, describing previous efforts to integrate the token on Wall Street as difficult.
Earlier this month, Ardoino estimated that the company’s gold holdings stood at 140 tons, nestled within a former nuclear bunker in Switzerland. At the time, that sum was worth an estimated $24 billion. Tether partially backs its $183 billion USDT stablecoin with gold.
At a market capitalization of $2.2 billion, Tether’s XAUT faces competition from PAX Gold. The products debuted within months of each other more than six years ago.
Despite their time in the market, Wintermute is among market makers that have only recently moved to support the token. Last week, the company said that it had begun executing over-the-counter trades in XAUT and PAX Gold on behalf of financial institutions.
The firm that handles billions of dollars in daily trading volume noted that there is robust demand for trading tokenized gold round-the-clock amid de-dollarization pressures. Along those lines, the company forecast that tokenized gold could become a $15 billion market by year-end.
