Amid growing interest in digital gold transactions, Tether has introduced a new unit called Scudo, designed to make gold more accessible in the digital realm. This development aligns with the increasing institutional and central bank appetite for gold, which is being accumulated at unprecedented levels.
Scudo, announced on Tuesday, represents one-thousandth of a troy ounce of gold and is directly tied to Tether’s existing digital gold token, XAUT. This means each Scudo equates to 1/1,000 of an XAUT token, a gold-backed asset supported by over 1,300 gold bars held in custody. The market capitalization of XAUT currently stands at approximately $2.3 billion.
The introduction of Scudo aims to further lower the barriers to fractional gold ownership, particularly as traditional gold ownership faces challenges related to storage, custody, and divisibility. While XAUT has already addressed some of these issues by tokenizing physical gold, Scudo is intended to enhance the ease of small-scale, onchain transactions.
Tether’s CEO, Paolo Ardoino, emphasized gold’s status as a premier store of value, akin to Bitcoin, especially following a year where gold prices soared beyond $4,550 per troy ounce. Ardoino likened Scudo to satoshis, the smallest unit of Bitcoin, highlighting its potential to revolutionize how gold is transacted in the digital space.
The past year marked a significant period for precious metals, with gold and silver prices experiencing substantial increases. Gold surged by around 65%, driven by efforts to move away from the dollar, significant central bank purchases, and ongoing inflation concerns. Meanwhile, silver prices jumped over 140%, reaching approximately $80 per troy ounce, reflecting a broader rise in the metals market.
Economist Peter Schiff noted the price surge as a potential indicator of looming high inflation, despite some moderation in recent inflation data. Gold's performance contrasted with Bitcoin, which saw declines and limited demand as a safe-haven asset, particularly after a market downturn in October.
This strategic move by Tether to introduce Scudo underscores the evolving landscape of digital assets and the continuing shift towards integrating traditional stores of value like gold into modern financial systems.