The market capitalization of tokenized gold assets has surpassed the $1 billion milestone, coinciding with near-record gold prices.

Tokenized gold is a stablecoin that mirrors the price of gold. It also allows investors to own physical gold through blockchain tokens without incurring the costs of exchange-traded funds (ETFs) or bullion storage.

Pax Gold (PAXG/USD), issued by New York-based fintech firm Paxos Trust Company, and Tether Gold (XAUT/USD), founded by Tether (USDT/USD), the firm behind the $80 billion stablecoin USDT, are two major gold stablecoins to date.

The underlying gold is held in custody by Paxos, with full ownership rights belonging to the token holder. Paxos is bound by U.S. law to back PAXG tokens with mandatory capital reserves. The Pax Gold ecosystem is tied to ERC-20 protocol on the Ethereum blockchain, while PAXG tokens can be traded worldwide, and are declared redeemable for LBMA-accredited London Good Delivery gold bars.

According to CoinGecko data, PAXG and XAUT have market capitalizations of $519.5 million and $497 million, respectively.