Tether’s gold-backed digital token, XAU₮, has secured Shariah certification, a move that opens the door for investors in Islamic finance to trade the asset. The certification, granted by a recognized Shariah advisory body, means XAU₮ now complies with Islamic principles that prohibit interest and require tangible backing.
What the certification means for Islamic finance
Islamic finance follows strict rules: investments must be tied to real assets, and speculation is largely off-limits. Gold-backed tokens like XAU₮ fit that framework because each token represents a specific amount of physical gold held in reserve. Until now, though, the token lacked formal Shariah approval, which kept many Islamic investors and institutions on the sidelines. The new certification changes that, giving them a green light to buy, hold, and trade XAU₮ in compliance with their faith.
Expanding the digital asset market
Tether expects the certification to broaden the pool of potential buyers. Islamic finance is a fast-growing sector, with assets estimated in the trillions of dollars globally. By meeting its standards, XAU₮ becomes accessible to a demographic that has largely steered clear of crypto assets due to religious concerns. That could bring fresh liquidity and stability to the token, which is already one of the larger gold-backed digital currencies by market cap.
The move also signals a growing push among digital asset issuers to seek religious and regulatory endorsements. Shariah-compliant tokens remain a niche, but they are gaining traction as the industry looks for ways to attract more conservative capital. For Tether, the certification is a practical step toward broadening its user base beyond the typical crypto crowd.
No timeline has been given for when the certified XAU₮ will begin trading on Islamic finance platforms, but the approval is already in place. The company has not announced any specific partnerships or listing plans tied to the certification.
