Borrow Against Gold Without Selling It: Abu Dhabi Puts India's Oldest Credit Product On-Chain
Abu Dhabi Global Market has approved Tether Gold (XAUt) as a spot commodity, allowing regulated firms in the financial free zone to offer services built on the tokenised gold asset — including, before the year is out, lending against it. Clients of platforms preparing such products will be able to borrow funds using tokenised gold holdings as collateral without selling them. To an Indian reader, that functional description will sound less like a frontier of digital finance and more like the oldest credit product in the country: the gold loan, rebuilt on regulated blockchain rails.
The approval follows ADGM's earlier acceptance of Tether's dollar-pegged stablecoin USDt as a fiat-referenced token, and brings a second Tether product under the regulatory umbrella of one of the Middle East's principal international financial centres. Tether Chief Executive Paolo Ardoino said the designation clarifies the route for regulated firms to offer the gold token, while ADGM said the move broadens the range of products and services firms in the free zone can handle. The significance lies less in the issuer than in the classification: tokenised gold has been placed inside a regulated commodity framework, which is what allows licensed firms to build custody, trading and collateralised lending on top of it.
The market data explains the timing. DeFiLlama figures cited in the coverage show the total value locked in Tether Gold rising more than threefold over the past year, from around $826 million to approximately $2.86 billion. Tracker RWA.xyz puts tokenised commodities at roughly $4.46 billion — close to 13 per cent of an overall tokenised real-world asset market of about $34.73 billion — establishing commodities as a third pillar of the RWA landscape alongside bonds and real estate. And the use case is visibly shifting from holding to borrowing: lending platform Ledn has said it plans to accept the gold token as loan collateral within the year. Demand for tokenised gold, in other words, is graduating from trading and custody to credit.
India did not need a distributed ledger to discover this demand. Indian households hold an estimated 25,000 tonnes of gold — among the largest privately held stocks in the world, a store of value that doubles as the country's most widely understood emergency credit line. Pledging gold to borrow without selling it is precisely the business that NBFCs such as Muthoot Finance and Manappuram Finance industrialised decades ago, and that banks have since scaled aggressively: gold-backed lending by banks alone crossed ₹3 lakh crore by March 2025, according to SBI Research, with the broader organised market growing at rates that outpaced every other retail credit segment. What ADGM has approved, functionally, is the gold loan — with a token standing in for the jewellery pouch and a smart contract standing in for the branch vault.
The regulatory parallel is just as striking, and it runs in India's favour on sophistication. The Reserve Bank of India issued its Lending Against Gold and Silver Collateral Directions, 2025 in June last year, consolidating three decades of scattered circulars into a single framework that took full effect on April 1, 2026. The Directions introduced tiered loan-to-value caps — 85 per cent for loans up to ₹2.5 lakh, 75 per cent above — alongside standardised valuation norms, limits on bullet repayments, mandatory timelines for returning pledged gold, and tightened auction procedures. India, in short, has just completed a comprehensive modernisation of the prudential architecture for lending against gold. What it has not yet addressed is what happens when the gold itself becomes a token.
That question is no longer hypothetical, and it arrives along a path Indian policy has already begun to map. The RBI has consistently urged lawmakers to distinguish between speculative crypto assets and tokenised versions of regulated financial instruments and real-world assets — a distinction it pressed in its submission to the Parliamentary Standing Committee examining virtual digital assets. Tokenised gold sits squarely on the asset-backed side of that line: a claim on allocated physical metal, held in vaults, wrapped in a transferable digital record. The International Financial Services Centres Authority's February 2025 consultation paper on real-world asset tokenisation contemplates precisely this category, and GIFT City's sandbox provides the controlled environment in which tokenised commodity products could be tested for the Indian market — including, eventually, as collateral within regulated lending frameworks.
The prize, if that path is ever walked, is not novelty but efficiency at extraordinary scale. India's gold loan machinery still depends on physical logistics: purity assays at the branch, vault storage, insurance, transport, and the operational risk that sits in each step. Tokenised gold compresses that chain — custody is centralised and audited, valuation is continuous against a global reference price, and the pledge itself becomes a programmable transfer rather than a physical handover. Loan-to-value ratios could be monitored in real time rather than at origination. For a market where the collateral is already trusted and the borrower behaviour already understood, the marginal gain from better rails is larger than in almost any other credit product.
None of this suggests the transition is imminent or simple. The RBI's gold lending framework is built around jewellery pledged by households, not vault-allocated tokens issued offshore; custody, insolvency treatment and the legal status of a token as pledged security in India remain open questions — the same questions, notably, that the Asset Tokenisation (Regulation) Bill, 2026, now before the Rajya Sabha, seeks to frame for tokenised assets generally. Consumer protection considerations are also of a different order when the collateral is a family's ornaments rather than an institutional gold position, a distinction India's regulators have historically weighed with care.
But the direction of travel is difficult to miss. Abu Dhabi has taken a product India understands better than any market in the world — credit against gold, without sale — and placed its tokenised form inside a regulated perimeter, with licensed firms now expected to roll out trading, custody and collateralised lending. The country that built the world's largest gold-loan industry on branch networks and vault logistics now has a working external reference for what the same business looks like on-chain. When India's tokenisation framework matures, gold may prove to be the asset class where regulated tokenisation meets the deepest existing demand — not because the technology creates a new behaviour, but because it formalises one that hundreds of millions of Indian households already trust.