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Tether Gold (XAUT) is a gold-backed stablecoin issued by TG Commodities, a subsidiary of Tether Holdings Limited.
Each XAUT token represents ownership in 1 fine troy ounce of gold held at vaults in Switzerland.
The Tether Group has a less than stellar reputation for its opaque operations and questionable practices. It has been the subject of intensive regulatory scrutiny and penal actions from the likes of the New York Attorney General and the CFTC for making false claims about the backing of USDT, another stablecoin issued by it.
In our assessment, XAUT is only suitable for high-net-worth individuals and institutions who have registered accounts with Tether for availing redemptions.
XAUT's rating can be upgraded from D to C by:
disclosing the names of its gold custodian(s) OR
lowering the minimum redemption value from $100K to $5K.
The Stability factor is evaluated on the following:
1. Reserves Management - Quality, quantity, storage and segregation of reserve assets
2. Market Feedback - Indicators of market's confidence in a stablecoin derived from price and trade data
3. Mechanism - Stabilization methods that protect the stablecoin
The Management factor is evaluated on the following:
1. Restrictions - What deterrents exist to prevent key personnel of stablecoin projects from unethical and illegal behavior?
2. Negative Track Record - Have key personnel been involved in scams, frauds or other illegal activities?
This factor aims to assess risks arising from technical implementations – i.e, smart contract code and oracles. It is currently not assessed, but we plan for it to be evaluated in the future.
The Decentralization factor is evaluated on the following:
1. Platform Censorship Risk
2. Custodian Risk
3. Type of Collateral
4. Diversified voting Power
5. User Censorship Risk
The Governance factor for asset-backed stablecoins is evaluated on the following:
1. Holder Protection - What rules, statutes or code exist to protect interests of stablecoin holders?
2. Reserves Verification - What checks are done to ensure existence of reserves?
3. Redemptions - Do issuers have transparent and reasonable redemption terms?
This factor seeks to incorporate external feedback mechanisms such as market and social sentiment into our internal ratings. It is currently not assessed, but we plan for it to be evaluated in the future.