Gold Tokens Reach $3.9B in Market Value as CZ Calls Them a ‘Trust Me Bro’ Investment

Gold Token Market Reaches $3.9B as CZ Flags ‘Trust Me Bro’ Risks

Even as gold prices stabilize near $4,100 per ounce, crypto tokens pegged to the metal are drawing increased interest. The total market capitalization of gold-backed tokens has risen to approximately $3.86 billion, fueled by strong performance from XAUT ($4,144) and Paxos Gold (PAXG), according to CoinGecko.

Yet, Binance co-founder and former CEO Changpeng Zhao (CZ) cautions that these tokens carry inherent trust risks.

“Tokenizing gold is NOT ‘on-chain’ gold,” CZ wrote on X. “It’s trusting a third party to deliver gold at some later date — possibly decades later, after management changes, or even during a war.”

The reliance on centralized issuers exposes token holders to risks similar to those facing stablecoins, whose values are pegged to fiat currencies. A recent NYDIG report highlights that even prominent stablecoins like USDC and USDT can break their peg under extreme market stress. For example, during the recent $500 billion crypto sell-off, Ethena’s USDe fell as low as $0.65, while USDC and USDT remained above $1.

While tokenized gold may appear attractive as a hedge, it carries hidden vulnerabilities.

“It’s a ‘trust me bro’ token,” CZ added. “This is why no gold coins have really taken off.”

Even the largest token, Tether Gold (XAUT), has a market cap of just $2.1 billion, dwarfed by USDT, which stands at $183 billion, underscoring the difference in scale and trust between gold-backed tokens and dollar-pegged stablecoins.