What Is PAX Gold (PAXG): A Digital Token Backed By Physical Gold

Key Takeaways

• PAX Gold (PAXG) is an ERC-20 token where each token represents one fine troy ounce of physical gold stored in LBMA-approved vaults in London.
• Unlike traditional gold investments, PAXG offers lower fees, no storage costs, fractional ownership (as little as 0.001 troy ounce), and near-instantaneous settlement.
• Paxos Trust Company, regulated by the New York State Department of Financial Services, issues PAXG and ensures monthly audits of the physical gold backing the tokens.
• PAXG combines gold’s stability as a store of value with blockchain technology’s accessibility, allowing for 24/7 trading and easy transfers globally.
• Token holders own the underlying physical gold and can redeem their PAXG for physical gold, unallocated Loco London Gold, or USD at current market prices.

In an era where traditional assets are increasingly being tokenized on blockchain networks, PAX Gold (PAXG) stands out as a pioneer in the digital gold space. This innovative cryptocurrency bridges the ancient world of physical gold with modern blockchain technology, offering investors a new way to own and trade the precious metal without the traditional complications of storage and security. PAX Gold was launched in September 2019 by Paxos Trust Company, becoming the first regulated digital gold product approved by the New York State Department of Financial Services.

For investors seeking exposure to gold through cryptocurrency markets, PAX Gold provides a regulated and transparent solution. Each token represents ownership of one fine troy ounce of physical gold, combining the stability of gold with the flexibility of digital assets. As of April 16, 2025, PAXG is trading at $3,245.16, with a circulating supply of approximately 225,390 tokens and a market capitalization of $731.43 million.

What Is PAX Gold?

PAX Gold is a digital asset backed by physical gold, created by Paxos to make gold ownership more accessible and efficient. Each PAXG token represents one fine troy ounce of a London Good Delivery gold bar, stored in professional vault facilities in London. This direct backing means that when you own PAXG, you own the underlying physical gold held in custody by Paxos Trust Company.

Unlike traditional gold investments that often involve significant storage fees, insurance costs, and verification challenges, PAXG leverages blockchain technology to eliminate these barriers. The token allows for fractional ownership, with purchases possible from as little as 0.001 troy ounce (approximately $3.25 at current prices), making gold investment accessible to a broader audience. Additionally, PAXG transactions settle near-instantly, compared to the typical two-day settlement period for traditional gold markets.

What truly sets PAX Gold apart from other gold-backed cryptocurrencies is its redeemability. Token holders can redeem their PAXG for actual physical gold bars (subject to minimum requirements), unallocated Loco London Gold, or convert it to USD at current gold market prices. This feature provides an additional layer of security and trust for investors, knowing their digital assets are directly tied to physical gold that they can claim if desired.

Who Is Behind PAX Gold?

Paxos Trust Company, the creator of PAX Gold, was founded in 2012 by Charles Cascarilla, Rich Teo, and Emil Woods. The company initially operated as a Bitcoin exchange called itBit before rebranding to Paxos in 2016. The founders brought extensive financial expertise to the venture, with a vision to modernize financial market infrastructure through blockchain technology.

As a regulated financial institution, Paxos operates under a Limited Purpose Trust charter from the New York State Department of Financial Services (NYDFS), which it received in 2015. This regulatory oversight distinguishes Paxos from many other cryptocurrency companies and provides additional security assurances for investors. The company received specific regulatory approval for PAX Gold from the NYDFS when it launched in September 2019, making it the first regulated gold-backed token.

In recent years, Paxos has expanded its reach through strategic partnerships. In 2022, the company partnered with major Latin American financial platforms including Mercado Libre, Nubank, and Picpay to offer PAX Gold to customers in the region. Additionally, Paxos received approval from the Monetary Authority of Singapore to provide cryptocurrency services in the country, further expanding its global footprint. These partnerships demonstrate both regulatory acknowledgment and growing institutional adoption of PAXG as a legitimate financial product.

How PAX Gold Works: A Technical Explanation

PAX Gold operates as an ERC-20 token on the Ethereum blockchain, leveraging the network’s security, transparency, and widespread adoption. Each token is minted when a customer purchases gold through Paxos, with the physical gold then allocated to the customer in the London vaults. The token is directly tied to a specific amount of physical gold, right down to specific serial numbers from individual gold bars. When PAXG tokens transfer between wallets, the allocated ownership of the physical gold moves with them.

The technical infrastructure behind PAXG combines traditional gold custody with blockchain innovation. The physical gold backing the tokens is stored in LBMA-approved security vaults in London, with the gold meeting the London Good Delivery standards for quality and purity. This gold is regularly audited by independent third-party accounting firms, with monthly attestation reports published by Paxos to verify that each token is fully backed by physical gold. As of February 2025, these audits are conducted by KPMG LLP, an independent accounting firm approved by Paxos’ prudential regulator.

From a user perspective, PAXG functions like any other Ethereum token, compatible with any Ethereum wallet that supports ERC-20 tokens. This allows users to store their gold-backed tokens in hardware wallets, mobile applications, or web-based interfaces. The tokens can be transferred globally at any time, even when traditional gold markets are closed. This 24/7 availability provides significant advantages over traditional gold markets, which operate only during specific hours and are closed on weekends. Additionally, PAXG can be integrated with other decentralized applications in the Ethereum ecosystem, including lending platforms, decentralized exchanges, and other financial services.

The smart contract that governs PAXG includes features for minting and burning tokens as physical gold is purchased or redeemed. When a customer redeems their PAXG tokens for physical gold or fiat currency, the corresponding tokens are burned, maintaining the one-to-one backing between tokens and physical gold. This process ensures the token supply always accurately reflects the amount of gold in custody, providing transparency and trust in the system.

Current Status Of PAX Gold In The Wider Ecosystem

In the rapidly evolving landscape of asset-backed cryptocurrencies, PAX Gold has established itself as a leading gold-backed token in the digital asset ecosystem. Operating in the real-world asset (RWA) sector, PAXG has gained recognition for bringing traditional gold investment into the blockchain space with regulatory compliance. This positions the token at the intersection of traditional finance and decentralized technologies, appealing to both conventional gold investors and cryptocurrency enthusiasts.

The gold-backed cryptocurrency sector has seen growing interest as investors seek inflation hedges with the efficiency of digital assets. Within this niche, PAXG stands out for its regulatory status and direct redeemability for physical gold. Recent data indicates robust trading activity, with volumes exceeding $60 million in a single day in March 2025, demonstrating significant market interest. Furthermore, in December 2024, derivatives platform Deribit integrated PAXG, allowing for spot trading, futures, and options on the token, expanding its utility within the trading ecosystem.

PAX Gold’s adoption extends beyond retail investors to institutional players seeking regulated exposure to gold through blockchain technology. The token’s presence on major cryptocurrency exchanges provides liquidity and accessibility, while its ERC-20 structure allows integration with decentralized finance (DeFi) applications. Users can leverage PAXG as collateral for loans, include it in diversified portfolios, or use it as a stable store of value within the volatile cryptocurrency market. This versatility has contributed to PAXG’s reputation as a bridge between traditional gold investment and the digital asset ecosystem.

As traditional financial institutions increasingly explore blockchain technology, PAX Gold represents a model for how regulated, asset-backed tokens can function within compliant frameworks. The successful implementation of PAXG demonstrates how physical assets can be tokenized without sacrificing regulatory oversight or asset security, potentially paving the way for further tokenization of commodities and other physical assets.

PAX Gold’s Price Journey

PAX Gold’s price trajectory closely mirrors the spot price of physical gold, reflecting its nature as a tokenized representation of the precious metal. Since its launch in September 2019, PAXG has maintained a strong correlation with gold prices, offering investors digital exposure to gold’s performance. In early 2025, PAXG experienced notable price appreciation as global economic uncertainties drove increased interest in gold as a safe-haven asset.

Looking at recent price data, PAX Gold has shown steady growth throughout the first quarter of 2025. From March to April 2025, the token price fluctuated between approximately $3,000 and $3,300, reflecting similar movements in the underlying gold market. On March 31, 2025, PAXG was trading at around $3,132, before climbing to its current price of $3,245.16 as of April 16, 2025. This represents a price increase of approximately 3.6% over a two-week period, demonstrating the relative stability compared to more volatile cryptocurrencies.

Trading volume for PAXG has also seen significant growth, with daily volumes exceeding $60 million in late March 2025 and increasing to over $80 million by mid-April. This growing liquidity reflects increasing market interest in gold-backed digital assets as both a store of value and a trading vehicle. Unlike many cryptocurrencies that experience extreme price volatility, PAXG’s movements are generally more measured, making it attractive to investors seeking exposure to digital assets with the relative stability of gold.

Current Data & Interesting Statistics About PAX Gold

• PAX Gold has a current market capitalization of $731.43 million as of April 16, 2025, ranking it among the top 100 cryptocurrencies by market value.
• The circulating supply of PAXG is approximately 225,390 tokens, each representing one fine troy ounce of physical gold stored in London vaults.
• Daily trading volume for PAXG has grown significantly in 2025, reaching over $84 million in mid-April, representing approximately 11% of its market capitalization in 24-hour volume.
• PAX Gold reached its all-time high price of $3,487.68 in early 2025, reflecting similar highs in the physical gold market during that period.
• Unlike most cryptocurrencies, PAXG has a perfect 1:1 backing ratio, with each token directly backed by an equivalent amount of physical gold, audited monthly by independent accounting firms.
• The minimum purchase amount for PAXG is 0.001 troy ounce (approximately $3.25 at current prices), significantly lowering the barrier to entry compared to traditional gold investments.
• PAX Gold is available on multiple cryptocurrency exchanges with perpetual futures and options markets being introduced in late 2024, expanding its appeal to traders and investors.

What Is The Future Of PAX Gold?

The outlook for PAX Gold appears promising as the intersection of traditional assets and blockchain technology continues to evolve. As more institutional investors seek regulated exposure to digital assets, PAXG’s status as a fully compliant, gold-backed token positions it favorably in the market. The continued expansion of trading options, including derivatives and integration with decentralized finance platforms, suggests growing utility beyond simple gold exposure.

Market analysts anticipate potential growth for PAX Gold as global economic uncertainties drive interest in gold as a hedge against inflation. According to forecasts compiled from various sources, PAXG could see its price reach approximately $3,275 by the end of April 2025, with further increases possible throughout the year. The token’s future success will likely depend on continued regulatory clarity, expansion of use cases, and growing accessibility through additional exchange listings and financial products. As traditional finance increasingly embraces blockchain technology, gold-backed tokens like PAXG represent a compelling bridge between established investment strategies and emerging digital asset innovations.

The most significant advantage of PAX Gold moving forward is its ability to combine gold’s millennia-old reputation as a store of value with the efficiency and accessibility of modern blockchain technology.

The Golden Bridge Between Traditional Finance & Blockchain

PAX Gold represents a significant innovation in the world of asset-backed cryptocurrencies, successfully bridging the ancient store of value that is gold with cutting-edge blockchain technology. By tokenizing physical gold on the Ethereum blockchain, Paxos has created a regulated, transparent, and efficient way for investors to gain exposure to gold without the traditional hurdles of storage, insurance, and transportation. The token’s direct backing by physical gold stored in London vaults, combined with regular third-party audits, provides a level of security and trust that distinguishes it from many other digital assets. Whether you’re a traditional gold investor looking to explore blockchain applications or a cryptocurrency enthusiast seeking more stable stores of value, PAX Gold offers a compelling solution that maintains the best attributes of both worlds while eliminating many of their respective drawbacks.