Category: Gold

Yogi Nelson, Blockchains, Banking, International Finance, Decentralized, tokenization, Austrian economics, Gold, Tether, precious-metals

Tokenized Precious Metal Issuers–Structure Matters as Much as the Token

Yogi Nelson

by Yogi Nelson

“A token isn’t gold; the structure behind it is—and that’s where the real competition in tokenized metals is happening”. Yogi Nelson

Coinbase CEO, Brian Armstrong, and Larry Fink, Blackrock CEO, both agree–tokenization of assets is the theme for 2026. Both understand tokenization has moved from theory to practice.  Tokenization of gold is at the forefront of this tsunami. Yet regulatory posture, and market integration matter far more than marketing claims.

This article provides a clear, structured comparison of the leading tokenized precious metal issuers operating in 2026. The goal is not to rank them by hype or price performance, but to evaluate them by structure, credibility, and long-term viability.

Why Issuer Structure Matters More Than the Token Itself

Tokenized precious metals are often discussed as if the token is the asset. It is not. The real asset is the legal and custodial framework behind the token.  Please remember this! 

Considering a tokenized purchase?  Here are a few questions to ask when conducting your due diligence: 

  • Who holds the metal, and where?
  • Is the metal fully allocated and segregated?
  • Who audits the reserves, and how often?
  • What legal rights does a token holder actually have?
  • Can the token be redeemed for physical metal?
  • Is the issuer regulated — and in which jurisdictions?

In 2026, the strongest issuers are those that treat tokenization as financial infrastructure, not merely as a crypto product.  I can’t emphasize this point enough.  With that as background, let’s examine the best-known gold token issuers.  They are listed in alphabetical order, not from “best” to “worse”.

CACHE Gold (CGT): Transparency-First Tokenized Custody

CACHE Gold approaches tokenization from a simple but demanding premise: trust must be visible. Rather than leading with liquidity or ideological framing, CACHE positions transparency and auditability as its core value proposition.

Each CGT token represents allocated physical gold stored in professional vaults across multiple jurisdictions. CACHE publishes detailed bar lists and emphasizes independent third-party audits, reinforcing the principle that token holders should be able to verify backing without relying on institutional reputation alone.  Trust but verify!

Tokenization here functions as a disclosure mechanism. The blockchain is not used to create financial complexity, but to make existing bullion practices more observable and accountable. This appeals to users who are less interested in DeFi composability and more concerned with proof-of-reserves discipline.  Smart idea.

The tradeoff is scale. CACHE operates within a smaller ecosystem, with lower secondary-market liquidity and fewer exchange integrations than the largest issuers. Its design prioritizes clarity over velocity.

Best suited for: investors who value strong transparency, auditability, and vault diversification over liquidity or speculative activity.

Comtech Gold (CGO): Tokenization Built for Trade and Settlement

Comtech Gold represents a distinctly utilitarian vision of tokenized metals. Rather than framing gold as an investment product, Comtech positions tokenized gold as commercial infrastructure—designed to support commodity trade, collateralization, and settlement in regulated environments.  They found a nice niche. 

CGO tokens are issued within commodity-exchange and trade-finance frameworks, particularly in emerging and trade-focused jurisdictions. Gold is held with approved custodians, and token issuance aligns closely with existing regulatory regimes governing physical commodities.

Tokenization here improves settlement efficiency, traceability, and operational speed without attempting to disrupt the logic of trade markets. Comtech does not pursue broad retail adoption or DeFi composability; its focus is narrow by design.

This specialization limits visibility among Western retail investors and reduces global liquidity. But within its intended domain, Comtech’s approach is structurally coherent.

Best suited for: trade finance, commodity settlement, and emerging-market use cases where regulatory alignment and real-economy integration matter most.

Kinesis (KAU, KAG): Tokenized Metals as a Monetary System

Kinesis treats tokenization not as a feature, but as monetary architecture. Its gold (KAU) and silver (KAG) tokens are designed to circulate, settle, and function as money rather than static investment instruments.

Each token is backed by allocated physical metal stored in professional vaults across multiple jurisdictions. What distinguishes Kinesis is its yield-sharing model, which redistributes transaction fees to users who hold and actively use the metals. This design emphasizes velocity—a deliberate attempt to restore monetary function to precious metals.  Back to the future?

Tokenization in Kinesis is therefore systemic. The blockchain coordinates ownership, settlement, and incentive distribution, creating an ecosystem where metals are meant to move.

This ambition introduces complexity. Users must understand system mechanics, fee flows, and governance. Institutional adoption has been slower than for simpler, custody-centric issuers.

Best suited for: users who believe precious metals should function as money, not merely as stores of value–an uphill climb.

Paxos (PAXG): Institutional-Grade Gold Tokenization

Paxos remains one of the most institutionally credible issuers in the tokenized metals space, largely because it separates bullion standards from financial regulation with precision.

Each PAXG token represents ownership of one fine troy ounce of allocated physical gold. The gold conforms to London Bullion Market Association (LBMA) Good Delivery standards, ensuring bullion quality and refinery credibility. Importantly, LBMA sets market standards; it does not regulate issuers.

Regulatory oversight applies instead to Paxos itself, which operates under supervision by the New York Department of Financial Services (NYDFS). This dual structure—LBMA-standard bullion combined with NYDFS-regulated issuance—has made PAXG particularly attractive to institutions requiring legal clarity and compliance discipline.

PAXG emphasizes traceability, auditability, and redemption integrity. Each token can be linked to a specific gold bar, and attestations confirm full backing.

The tradeoff is flexibility. PAXG is gold-only, closely tied to U.S. regulatory jurisdiction, and less optimized for crypto-native experimentation.

Best suited for: institutions and regulated investors prioritizing legal certainty and bullion-market credibility.

T-Gold (SchiffGold): Sound-Money Tokenization with a Preservation Bias

Schiff Gold’s T-Gold reflects a philosophy-driven approach to tokenization. Rather than treating gold as a financial primitive to be re-engineered, T-Gold positions tokenization as a modern wrapper around traditional bullion ownership.

T-Gold represents allocated physical gold held with professional custodians, integrated into SchiffGold’s broader bullion ecosystem. The emphasis is preservation, ownership, and monetary discipline rather than yield or liquidity engineering.

Tokenization here improves portability and auditability without altering gold’s role as sound money. This clarity appeals strongly to investors already aligned with macro-oriented or anti-debasement narrative–a growing segment of the market.

Liquidity and secondary-market integration remain more limited than with larger issuers, and institutional settlement use cases are not the primary focus.

Best suited for: investors who prioritize sound-money principles and long-term wealth preservation.

Tether Gold (XAUT): Liquidity-First Tokenization at Global Scale

Tether’s XAUT represents a liquidity-first approach to tokenized gold. Each token corresponds to one fine troy ounce of allocated gold held in Swiss vaults, with redemption mechanisms available for larger holders.

What distinguishes XAUT is distribution and market depth. It is widely integrated across exchanges, wallets, and crypto-native platforms, often exhibiting greater secondary-market liquidity than competing gold tokens.

XAUT operates largely outside U.S. regulatory frameworks, offering flexibility and global reach but less formal oversight. Tokenization here is pragmatic: gold is treated as a stable, functional asset that can move at internet speed.

Best suited for: globally distributed, crypto-native users who value liquidity and accessibility over regulatory conservatism.

Key Comparison Themes

Across issuers, several patterns emerge:

  • Custody quality is table stakes; allocation and segregation are non-negotiable.
  • Redemption rights distinguish true tokenization from synthetic exposure.
  • Regulatory posture shapes who can use a token—and how.
  • Narrative coherence matters; the strongest issuers know why they tokenize.

Conclusion: Tokenization Is a Toolkit, not a Template

There is no single “best” tokenized precious metal issuer in 2026. Instead, there are clear leaders within distinct philosophies:

  • CACHE → transparency and auditability
  • Comtech Gold → trade and settlement
  • Kinesis → monetary re-engineering
  • Paxos → institutional compliance
  • T-Gold → sound-money preservation
  • Tether Gold → liquidity and reach

Tokenization is no longer about digitizing metal for novelty. It is about how metal-backed trust is structured, verified, and deployed in a programmable financial world.

That is the real story—and why issuer design now matters more than the token itself.

Until next time,

Yogi Nelson

Banking, Blockchains, Decentralized, Digital Currency, finance, Gold, International Finance, precious-metals, tokenization, Yogi Nelson

Gold, the UNIT, and mBridge: How Tokenization May Rewire Global Settlement

Yogi Nelson

Today, gold is once again being repositioned—not as a domestic currency, but as international settlement infrastructure. This time, however, it is being paired with something previous systems lacked: blockchain-based verification and settlement rails.

The emerging combination of gold, the proposed UNIT, and the mBridge settlement system, strengthened by tokenization, represents a new and potentially powerful evolution of gold-backed money—one designed for a multipolar, digital world.

This is not a return to the gold standard. It is something more modern, more flexible, and more structural.

Gold’s Role Has Always Been About Trust

Gold earned its monetary role long before central banks existed. Its appeal was never ideological. Gold worked because it was scarce, durable, and politically neutral. It allowed settlement between parties that did not trust one another.

As economies expanded, gold’s form changed. Coins gave way to paper claims redeemable for metal. Later, convertibility faded, but gold remained central as a reserve asset—anchoring confidence rather than enforcing discipline.

Each transition reflected the constraints of the era. What remained constant was gold’s function as trust infrastructure. That function is being revisited today.

Why the Current System Is Being Questioned

The modern global monetary system is built around two pillars:

  1. The U.S. dollar as the dominant settlement and reserve currency
  2. SWIFT as the primary global financial messaging network

This system is efficient, liquid, and deeply entrenched. But it also creates structural asymmetries. Nations that do not control the system (90%+ of the world) remain dependent on it for trade settlement, reserves, and cross-border payments.

For the BRICS nations—Brazil, Russia, India, China, and South Africa—those asymmetries have become increasingly visible:

  • Trade volumes have grown faster than monetary influence
  • Sanctions and payment restrictions have highlighted vulnerability
  • Correspondent banking adds cost, delay, and political exposure

The response has not been to abandon fiat currencies or dismantle existing systems. Instead, BRICS policymakers have explored parallel architectures—systems that coexist with the current order but reduce dependency on it. Gold naturally reenters the picture here.

The UNIT: Gold-Referenced Settlement Money

The proposed UNIT is not a retail currency and not a replacement for national money. It is best understood as a trade settlement and accounting unit, designed primarily for use within BRICS trade corridors.

Publicly discussed models describe the UNIT as being backed by a hybrid structure:

  • 40% gold
  • 60% fiat currency, divided evenly among the five founding members

This design is intentional. Gold provides neutrality and credibility. Fiat components preserve flexibility and continuity with existing monetary systems.

The UNIT does not seek to dethrone the dollar globally, at least not yet. Instead, it challenges the dollar’s default role in BRICS trade settlement, offering an alternative reference unit that reduces reliance on any single sovereign currency. But money alone does not create a system. Settlement requires infrastructure. This is where mBridge enters the story.

mBridge: The Settlement Rail

mBridge is not money. It is infrastructure—a blockchain-based, multi-CBDC settlement platform designed to enable direct value transfer between central banks and large institutions.

Unlike SWIFT, which transmits payment instructions, mBridge is designed to settle value itself. It reduces the need for correspondent banks, shortens settlement times, and increases transparency.

The distinction is critical:

  • SWIFT answers the question: Who should pay whom?
  • mBridge answers the question: Has payment occurred?

mBridge does not replace SWIFT outright. But it introduces a parallel settlement pathway, particularly attractive to countries seeking to reduce exposure to existing financial chokepoints.

On its own, mBridge is a powerful tool. Combined with a gold-referenced unit like the UNIT, it becomes something more and when tokenization is dropped into the mix, a challenger appears on the horizon.

Tokenization: The Force Multiplier

Gold-backed systems historically failed for predictable reasons: opacity, centralized control, and political override. Trust depended on promises rather than proof. Tokenization changes that equation.

Tokenization allows physical gold held in sovereign vaults to be:

  • Digitally represented
  • Cryptographically verified
  • Independently audited
  • Programmatically referenced in settlement

In a UNIT–mBridge framework, tokenization could serve as the verification layer that binds money and infrastructure together.  Rather than relying on declarations that gold exists, tokenization allows systems to prove it.

How the System Could Work in Tandem

In combination, the components align naturally:

  • Gold provides neutral, non-sovereign credibility
  • The UNIT provides a shared settlement and accounting unit
  • mBridge provides the blockchain-based settlement rail
  • Tokenization provides verification, transparency, and enforcement

Under such a framework:

  • Gold remains physically stored within national vaults
  • Each nation retains sovereign custody over its reserves
  • Tokenized representations confirm the existence and allocation of gold
  • mBridge settles obligations using verified balances
  • The UNIT functions as the accounting and pricing reference

This structure does not eliminate fiat currencies. It operates above them, coordinating settlement without replacing domestic monetary systems.

Challenge or Revolution?

It is important to be precise. This system does not overthrow the dollar or dismantle SWIFT overnight.  Instead, it introduces functional competition:

  • Competition to SWIFT in settlement infrastructure
  • Competition to the dollar in specific trade corridors
  • Competition based on architecture, not ideology

Tokenization is what makes this competition real. Without it, the UNIT is an accounting idea and mBridge is an experiment. With it, they become a coherent, auditable system. This is how monetary systems change—not through abrupt replacement, but through parallel adoption.

Why Gold Fits This Moment

Gold is uniquely suited to this role:

  • Central banks already hold it
  • Custody practices are established
  • It is not consumed or degraded
  • It functions naturally as collateral

Unlike other commodities, gold does not need to circulate to be useful. Its credibility increases when it remains immobile and verified. Tokenization allows gold to be digitally active without being physically mobile.

Historical Continuity, Not Regression

Seen in historical context, this evolution is logical:

  1. Gold as physical money
  2. Gold as paper backing
  3. Gold as reserve asset
  4. Gold as digitally verified settlement anchor

Each stage reflects technological capability and political reality. Tokenization does not restore the gold standard. It modernizes gold’s role as trust infrastructure.

The UNIT and mBridge are not anomalies. They are contemporary expressions of an ancient instinct: when trust is uneven, systems seek neutral anchors.

Conclusion: Tokenization as the Enabler

Gold-backed money has always depended on credibility. What has changed is how credibility can be demonstrated. By combining gold, the UNIT, mBridge, and tokenization, BRICS nations are exploring a system where backing is verifiable, settlement is direct, and trust is structural rather than discretionary.

This does not replace existing systems. It pressures them. It offers alternatives. And once alternatives exist, they tend to persist.

Tokenization is not the headline. It is the enabler—the quiet force that allows gold-backed settlement to function in a digital, multipolar world.

That is why this moment matters.

Until next time,

Yogi Nelson

Banking, Blockchains, Decentralized, Digital Currency, finance, Gold, International Finance, precious-metals, tokenization, Yogi Nelson

Why Tokenized Gold is Becoming the Standard for Hard Assets

Yogi Nelson

by Yogi Nelson

Tokenized gold is not about changing gold.
It is about changing how we own, transfer, and verify it.

For thousands of years, gold has endured because it combines scarcity, durability, and universal recognition. Those properties will not change in 2026 or beyond. What is changing is the infrastructure around gold.

Platforms such as T-Gold and Paxos Gold (PAXG) show how fully backed physical gold can now be represented digitally—without turning it into paper promises or abstractions. The gold remains vaulted and insured. Ownership moves digitally.

This is not a revolution. It is an upgrade.

Tokenization separates custody from ownership transfer, reducing friction while preserving asset integrity. That is why gold is emerging as the benchmark for real-world asset tokenization—and why institutions are paying attention.

Gold remains gold. What changes is how efficiently it can participate in a digital financial system.

This is an abbreviated version of this article. For the complete article, or previous articles in this series visit my blog at:  https://yogapuertorico.wordpress.com/wp-admin/post.php?post=2537&action=edit

This article is part of an ongoing weekly series examining the tokenization of precious metals—covering custody, standards, regulation, issuer structure, settlement infrastructure, and market design. The series is published on BlockchainAIForum and LinkedIn and is among the few sustained, multi-metal editorial projects focused on tokenized metals as financial infrastructure rather than product promotion.

Austrian economics, Banking, Blockchains, cryptography, Decentralized, Digital Currency, Gold, International Finance, Mining, precious-metals, Silver, Tether, tokenization, Uncategorized

Why Tokenized Gold is Becoming the Standard for Hard Assets

Yogi Nelson

by Yogi Nelson

Dating back thousands of years, well before the ancient Roman Empire, gold has maintained its role as a store of value. That’s impressive. That begs the question: what properties does gold have that allow it to endure while paper money always fails? The answer is—gold combines scarcity, durability, and universal recognition.

In 2026, and beyond, gold’s properties won’t change—of that I am sure. Nevertheless, major change is afoot—of that I am sure also. Am I contradicting myself? Not at all. The evolution of gold in 2026, and beyond, will be the manner and infrastructure used to own, transfer, and verify it—of that I am confident also.

As discussed in Week One, tokenization does not alter the nature of an asset—it changes how ownership is represented and transferred. It’s an update, not a revolution. In other words, tokenized gold applies all the same properties to fully backed physical gold, allowing it to function within modern digital financial systems without losing its physical foundation.

Tokenized Gold in Practice: T-Gold

Tokenized gold is no longer theoretical. Platforms such as T-Gold (by Peter Schiff) illustrate how this model works in practice. T-Gold uses blockchain technology (Ethereum) to digitally represent ownership of fully allocated physical gold.

On T-Gold, a client can purchase tokenized gold through the digital platform. Each token represents a defined quantity of physical, investment-grade gold held in professional, insured vaults. The gold remains stationary; ownership changes are recorded digitally. This distinction mirrors a core theme from Week One: custody and ownership do not need to move together. The token is not a derivative or a paper promise. It represents ownership of allocated gold, expressed through a digital record.

In practical terms, T-Gold allows clients to:

  • Acquire physical gold without handling or transport
  • Hold gold in divisible digital units
  • Transfer ownership efficiently
  • Retain the option of physical redemption, subject to platform terms

The result is gold ownership that combines physical backing with digital efficiency. Point on the scoreboard!

A Second Reference Point: Paxos Gold (PAXG)

Paxos Gold (PAXG) provides a second, widely recognized example of institutional-grade tokenized gold. Paxos decided to go with the most used layer one blockchain—Ethereum.

Each PAXG token represents one fine troy ounce of gold, allocated to specific London Good Delivery bars stored in LBMA-approved vaults. Token holders can verify the serial numbers of the bars backing their tokens and, under defined conditions, redeem tokens for physical metal. Trust and verify!

As outlined in Week One, transparency and auditability are non-negotiable requirements for credible real-world asset tokenization. PAXG demonstrates how those requirements are implemented in practice through allocation, reporting, and regulated custody.

Why Traditional Gold Ownership Is Operationally Limited

Physical gold ownership is risky. With physical ownership, a multitude of weak points are introduced. For example, you could have disasters in storage, insurance, security, and transport. That’s why I can’t imagine storing gold at home.

Paper gold products, on the other hand, reduce some frictions—but at what costs? With paper you have counterparty risk, opacity, and a lack of direct claims on specific bars.

Is there a solution to the dilemma? Yes, tokenization.

Why Blockchain Fits Gold

Tokenization, as framed in Week One, separates physical custody from ownership transfer. Gold remains physical; ownership becomes digital. This separation reduces friction without weakening asset integrity. A perfect solution. Moreover, blockchain systems provide verifiable ownership records, fine-grained divisibility, near-instant settlement, and cross-border transferability. These characteristics align closely with the functional goals described in Week One for modernizing hard assets without financial abstraction.

Applied to gold, blockchain improves how ownership is recorded and transferred—nothing more, and nothing less, at a reasonable price. Winner!

Why Gold Leads Tokenized Hard Assets

Gold is emerging as the lead tokenized hard asset. It’s not hard to understand why if you consider what I explained in Week One—gold has global acceptance, deep liquidity, high value density, mature custody infrastructure, and established legal treatment. T-Gold and Paxos Gold demonstrate the broader principle: blockchain can enhance hard assets without turning them into abstractions.

Could others follow? Sure. Over the course of 2026, I will cover the other possible candidates, including silver, copper, or farmland. Gold, rightly, is the pioneer—but others will most likely trail not far behind.

Is Big Money Open to Tokenization

BlackRock Asset Management and Franklin Templeton are tokenizing financial assets in record volume. In fact, BlackRock CEO, Larry Fink, has spoken openly about the tokenization of all assets. Therefore, why doubt that tokenization of gold is not inevitable? Already, we see tokenized gold is increasingly used within institutional and regulated environments, including digital custody platforms, on-chain settlement systems, collateral frameworks, and portfolio allocation tools. Basically, tokenization is evolving as infrastructure, not disruption. Tokenized gold improves efficiency while remaining compatible with existing financial systems. Great combo!

Due Diligence Never Goes Out of Style

Tokenization does not eliminate risk. Custodian quality, vault jurisdiction, audit transparency, legal enforceability of redemption rights, and blockchain governance all remain critical considerations. These risks align with the asset-layer framework introduced in Week One: weaknesses in the physical, legal, or digital layer undermine the entire structure.

Conclusion

As this series continues, the same framework introduced in Week One, and reinforced here in Week Two, will be applied to silver, copper, and other metals. However, I started with gold as it remains the benchmark—the asset that shows how traditional value can function in a digital system. Gold remains unchanged. What changes is how ownership is recorded and transferred. Technology enhances asset clarity, a necessity in today’s world!

Until next time,

Yogi Nelson

Selected Sources

This article is part of an ongoing weekly series examining the tokenization of precious metals—covering custody, standards, regulation, issuer structure, settlement infrastructure, and market design. The series is published on BlockchainAIForum and LinkedIn and is among the few sustained, multi-metal editorial projects focused on tokenized metals as financial infrastructure rather than product promotion.

Blockchains, cryptography, Decentralized, Digital Currency, finance, Gold, International Finance, Mining, precious-metals, tokenization, Uncategorized, Yogi Nelson

How to Redeem Tokenized Metals for Physical Bullion (Step-By-Step Guide)

Yogi Nelson

by Yogi Nelson

Tokenized metals sound straightforward: you acquire a digital token representing gold or silver, and you redeem it for physical bullion when desired. In practice, redemption is absolutely possible—but it is not universal, instantaneous, or frictionless. No way! Redemption sits at the intersection of blockchain mechanics, professional vaulting, compliance obligations, and real-world logistics.

This article explains how redemption typically works, step by step, and where nuance matters. It also examines how different tokenized metal issuers approach redemption in practice. The issuer examples below are listed in alphabetical order.

Why Redemption Exists (and Why It Matters)

Redemption is the ultimate trust test. If a tokenized metal product cannot be converted into physical bullion through a clear, enforceable process, the token may still track price—but it begins to resemble synthetic exposure rather than ownership.

Even if most holders never redeem, the existence of redemption:

  • Anchors the token to physical reality
  • Disciplines issuers to maintain reserves and procedures
  • Reduces the risk of “paper gold” problems migrating into token form

Redemption answers one essential question: Can digital ownership be converted into physical control under real-world rules?

Before You Redeem: What to Confirm Up Front (and How to Confirm It)

This is the due diligence section. Most redemption headaches come from skipping these checks.

1) Allocated vs Unallocated

Do not assume “backed by gold” means allocated.  Here’s how to confirm it:

  • Read the issuer’s legal terms, not just the marketing page. Look for explicit language such as “allocated,” “segregated,” “specific bars,” or “direct ownership interest in physical bullion.”
  • Look for bar list language: credible allocated systems often publish (or can provide) bar lists with identifiers such as refiner, serial number, weight, and purity.
  • Confirm whether the metal is on the custodian’s balance sheet. Unallocated structures often operate like a claim on a pool. Allocated structures generally aim to be bankruptcy-remote through custody/bailment frameworks.

A practical rule: if you cannot find any clarity about bar-level identification or allocation, assume it may be unallocated until proven otherwise.

2) Custodian Quality: How to Evaluate

Custody is the center of gravity in tokenized metals. Assess the custodian using the same mindset institutions use:

  • Reputation and specialization: Is the custodian a recognized bullion vault operator or a generic storage provider?
  • Jurisdiction: Where is the vault located? Jurisdiction affects legal enforceability, bankruptcy treatment, and dispute remedies.
  • Audit access and reporting: Does the custodian support third-party audits and bar-list reconciliation?
  • Insurance coverage clarity: Is there clear documentation that the stored bullion is insured, by whom, and for what categories of loss?

High-quality custody is boring by design. It should feel procedural, controlled, and document-heavy. If custody feels vague, that is a signal.

3) Compliance Requirements

Compliance can surprise crypto-native users. It should not. You are redeeming a high-value physical asset. Typical compliance requirements include:

  • KYC (Know Your Customer): verifying identity (government ID, address verification, sometimes proof-of-funds).
  • AML (Anti-Money Laundering): issuer review of transactions to ensure the redemption is not linked to illicit activity.
  • Sanctions screening: confirming the person and destination are not prohibited.
  • Shipping restrictions: some jurisdictions have import rules or restrictions on precious metals shipments.

How to stay compliant:

  • Use your own verified account; do not “redeem for a friend.”
  • Keep transaction records and invoices.
  • Do not route tokens through questionable mixers or obscure hops right before redemption.
  • Ensure the delivery destination is legally permissible (customs and duties matter).

Compliance is not there to annoy you; it is there because issuers that ignore it do not survive.

The Step-By-Step Redemption Process

Step 1: Choose Your Redemption Outcome

Most issuers support one or more of the following:

A) Insured Delivery

This is the most intuitive option: bullion arrives at your address.

But “insured delivery” is a chain of real-world responsibilities:

  • The issuer or logistics partner packages bullion using tamper-evident procedures.
  • A carrier transports it under insured conditions (insurance may be carried by the vault, carrier, issuer, or third-party policy depending on the arrangement).
  • Delivery often requires signature, ID verification, or secure drop protocols.

Costs usually include:

  • handling/processing fees
  • shipping fees
  • insurance premiums
  • sometimes fabrication fees if the redemption requires specific minted products

Important nuance: insured does not mean “risk-free.” Insurance coverage has definitions and exclusions. You should know when liability shifts (more on that in Step 9).

B) Vault Pickup

Vault pickup can reduce shipping complexity and cost, but it introduces operational burden:

  • You may need a scheduled appointment and identity verification at the vault.
  • Some vaults require specific authorization letters from the issuer.
  • There may be restrictions on how bullion can be transported out.

Vault pickup is best for:

  • those traveling near the vault
  • larger redemptions where shipping costs are significant
  • individuals who prefer to control transport

It also introduces personal security considerations. Leaving a vault with bullion is not a theoretical risk. It is a real-world one.

C) Conversion to an Allocated Vault Account

This is often overlooked. In many systems, “redemption” can mean converting your token claim into a direct allocated vault holding without shipping. This is popular among:

  • institutions
  • high-net-worth holders
  • anyone who wants ownership clarity without delivery risk

Step 2: Confirm Token Eligibility and Network (Canonical vs Wrapped Tokens)

This step avoids a common and painful mistake.

  • A canonical token is the issuer’s “official” token contract that represents the underlying metal according to the issuer’s terms.
  • A wrapped token is a derivative representation issued by another protocol or bridge. It may track the canonical token, but it is not necessarily redeemable by the issuer.

Example conceptually:

  • You might hold “wrapped XAUT” on a DeFi platform.
  • The issuer may only redeem the original XAUT held in eligible form.

Practical takeaway: redemption almost always requires you to hold the canonical token in a wallet/account format the issuer can recognize.

Step 3: Open or Verify a Redemption Account

Expect identity verification. Even if you acquired tokens anonymously, physical delivery forces compliance.

Step 4: Request a Redemption Quote

Before you select bars vs coins, the issuer typically needs:

  • your verified identity status
  • your destination country/state
  • your preferred delivery method
  • your redemption quantity
  • whether you want specific formats

Then you receive:

  • an itemized fee estimate
  • available product formats
  • processing timeline
  • terms of risk transfer and insurance

This is effectively your “term sheet” for physical settlement. Read it like one.

Only after that quote phase do you select:

  • bar vs coin format
  • weight sizes
  • delivery vs pickup option

Step 5: Lock the Redemption Order

Pricing may be locked at:

  • the moment you confirm the quote, or
  • the moment tokens are received, or
  • the moment the bullion leaves the vault

This matters in volatile markets.

Step 6: Transfer or Retire Tokens

Redemption requires that the digital claim be removed from circulation in a controlled way.

Mechanically, one of three models is used:

  1. Transfer-to-issuer model
    • Send tokens to an issuer-controlled redemption address.
    • Issuer confirms receipt on-chain.
    • Issuer later burns/locks/marks tokens as redeemed internally.
  2. Smart-contract burn/lock model
    • Send tokens to a contract that programmatically locks or burns them.
    • The contract emits an event that triggers off-chain fulfillment.
  3. Partner/dealer model
    • Transfer tokens to an authorized dealer or partner.
    • The partner executes redemption through its custody channels.

Why this matters: the issuer must ensure redeemed tokens cannot be resold while physical bullion is being delivered. That is the core integrity requirement.

Step 7: Off-Chain Verification and Reserve Reconciliation

Once tokens are received/retired, the issuer must reconcile:

  • token supply changes
  • reserve records
  • custody documentation
  • internal controls

This is where proof-of-reserves discipline becomes operational. In other words, reserve verification stops being a periodic report and becomes an active process that must hold up under transaction pressure.

A serious issuer must be able to show, in operational terms:

  • which inventory is being released
  • how it matches allocation records
  • how token supply changes reflect the release
  • who approved and documented the transaction

If this step is weak, redemption becomes the moment where a system breaks.

Step 8: Picking, Fabrication, and Packing

If you redeem for a standard bar that already exists in inventory, the process may be “pick and pack.”

If you redeem for coins or specific branded bars:

  • metal may need to be fabricated (minted)
  • the product may require assay verification
  • packaging must preserve chain-of-custody
  • serial documentation may be generated or confirmed

This is why minimum redemption sizes exist. Logistics and fabrication do not scale down smoothly. The hidden truth: redemption is often less about blockchain and more about inventory management.

Step 9: Delivery or Vault Pickup

When I say “risk transfers from issuer to holder,” I mean there is a contractual moment when liability shifts. For delivery, that moment might be:

  • when the vault hands the package to the carrier
  • when the carrier confirms delivery
  • when you sign for receipt

The issuer’s terms should specify:

  • who bears risk in transit
  • what insurance covers
  • how claims are handled
  • what happens if delivery fails

For pickup, risk may transfer:

  • the moment the vault releases the bullion to you

This is not fine print trivia. It determines who eats the loss in a rare but real adverse event.

Step 10: Final Documentation

Keep records:

  • redemption confirmations
  • invoices
  • shipping docs
  • serial/bar docs (if provided)

These can matter for tax, insurance, resale, and audit questions later.

Real-World Issuer Examples (Alphabetical Order; Not Ranked)

CACHE Gold (CGT): CACHE emphasizes transparency, audits, and bar-level visibility. Redemption is conventional, structured, and logistics-driven.

Comtech Gold: Comtech’s model leans institutional and commerce-oriented. Redemption typically aligns with regulated commodity settlement pathways, not retail convenience.

Kinesis (KAU/KAG): Kinesis integrates redemption into a broader “metals as money” system. Redemption exists, but the design emphasizes circulation and settlement within the ecosystem.

Paxos Gold (PAXG): PAXG focuses on disciplined custody, formal procedures, and regulatory posture. Redemption is strong but not designed for casual users.

T-Gold (SchiffGold): T-Gold uses tokenization as a modern wrapper around traditional bullion acquisition and custody workflows. Redemption mirrors bullion reality, not crypto convenience.

Tether Gold (XAUT): XAUT is widely distributed and liquid; physical redemption exists but generally favors larger holders and structured processes.

Institutional Perspective: Why Settlement Finality Matters

Finality reduces risk, that appeals to institutions.

Settlement finality means the transaction is completed in a legally enforceable way such that:

  • ownership transfer is final and cannot be reversed
  • the asset is not subject to unsettled counterparty obligations
  • the institution can treat the asset as “real” for accounting, collateral, and compliance purposes

From a risk management perspective, finality reduces:

  • counterparty risk
  • operational risk (failed settlement, reconciliation disputes)
  • legal risk (unclear title or claim priority)

From a compliance perspective, finality strengthens:

  • audit trails
  • demonstrable ownership
  • controlled custody
  • clear redemption rights

Institutions do not embrace tokenization because it is modern. They embrace it when it produces cleaner, faster, more verifiable finality than legacy settlement systems.

Final Thought: Redemption Is the Bridge

Tokenized metals do not promise magic. They offer a bridge:

  • blockchain for ownership transfer
  • vaults for physical custody
  • audits for verification
  • redemption for enforceability

When that bridge is well built, tokenization earns trust.

This article is part of an ongoing weekly series on the tokenization of precious metals, published on BlockchainAIForum and LinkedIn, examining custody, regulation, issuer structure, and settlement infrastructure.

Until next time,


Yogi Nelson