Tether Gold has received Shariah certification for XAU₮, expanding the potential use of the gold-backed token among Islamic banks, institutions, and individual investors.
Summary
- Amana Advisors confirmed XAU₮ after reviewing its structure against Islamic financial principles.
- Each XAU₮ token represents troy fine ounce of visible gold held in Swiss homes.
- The locked value of Tether Gold is tripled from it approximately $2.86 billion in the past year.
- The approval follows the recognition of XAU₮ as Spot Commodity accepted in Abu Dhabi.
XAU₮ receives Shariah approval from Amanah Advisors
Tether announced on July 27 that XAU₮ received a Shariah-compliant certificate from Amanah Advisors, a global Islamic financial advisory firm led by Mufti Faraz Adam.
The update covered the token ownership model, transparency, physical support, and compliance with Islamic laws governing the sale of gold. Amana Advisors also assesses whether the product involves leverage, energy, or speculative derivatives.
According to Tether’s announcement, the certificate found that XAU₮ meets the main requirements of Islamic finance. These include clear ownership of real property and the absence of riba, the Islamic term for interest.
TG Commodities, SA de CV issues XAU₮. Each full token represents ownership of a troy fine ounce of gold in a London Good Delivery bar held in Switzerland.
The certificate opens access to Islamic financial markets
Shariah approval can make XAU₮ available for a wide range of Islamic financial products, including halal savings (savings permitted under Islamic law), institutional gold allocation, takaful (Islamic insurance) services, trade finance, and collateralized lending.
Islamic finance generally requires transactions involving tangible assets while avoiding interest, excessive uncertainty, and speculation such as gambling. XAU₮’s connection to the shared bullion gives institutions a way to provide blockchain-based gold exposure without having to invest in the underlying physical asset through an artificial contract.
Tether CEO Paolo Ardoino described the certificate as a bridge between the fixed demand for gold and a blockchain-based financial infrastructure.
“Gold has always represented stability and trust in all cultures and generations.”
He added that recognition could widen the reach of digital gold while respecting the principles followed by Islamic financial institutions.
Potential growth markets include countries in the Gulf Cooperation Council, South Asia, Africa, and other regions with large Muslim populations and established demand for physical gold.
The situation in Abu Dhabi strengthens Tether Gold’s position
The certificate follows another XAU₮ regulatory development in the Middle East. The Abu Dhabi Global Market recently recognized the token as an Accepted Local Market, allowing firms within the financial institution to support it when they hold the necessary regulatory approvals.
The appointment of ADGM does not allow every intermediary to issue XAU₮ automatically. Eligible firms must still obtain approval to use Acceptable Spot Goods and hold permits covering the relevant services.
ADGM previously recognized Tether’s USDT as an Accepted Fiat Referenced Token. The two assets fall under different regulatory categories, but their recognition gives Tether a way to place both its dollar-backed stablecoin and gold-backed token within the Abu Dhabi financial center.
Data cited by crypto.news showed that the locked value of Tether Gold increased from about $826 million to about $2.86 billion last year, marking a threefold increase. The increase reflects strong demand for tokenized gold as investors seek blockchain-based access to the bullion.
What does accreditation mean for US investors
Shariah certification does not change XAU₮’s legal or regulatory status in the United States. Instead, it ensures that Amana Advisors consider the structure of the token in line with Islamic financial principles.
US investors can view the approval as an additional assessment of the XAU₮ asset support model, but it does not replace their review of savings, loans, terms of use, exposure to others, or tax management.
Tether also worked to expand XAU₮ beyond trading and custody. Its partnership with Bitcoin lending company Ledn is expected to allow token holders to use the token as collateral for loans, expanding its role into payment services while maintaining its gold backing.
Shariah certification and asset recognition in Abu Dhabi may support wider institutional adoption, although access will continue to depend on local regulations and the approvals held by participating financial firms.
