Tether’s gold-backed token, XAU₮, has been officially recognized as compliant with Islamic banking standards. The approval comes from the Advisors Secretariat under the guidance of Mufti Faraz Adam. This decision confirms that the token meets basic Sharia standards of ownership, transparency and non-prohibited elements.
The historical role of gold and digital correlation
The Islamic tradition of using gold as a means of preserving value goes back more than fourteen centuries. At the same time, the world’s financial systems are evolving into digital adoption. XAU₮ It attempts to fill this gap by allocating each token to a certain amount of physical gold in secure vaults in Switzerland. Holders do not receive a paper promise or derivative contract, but rather direct ownership of the metal. This arrangement excludes interest charges, borrowed funds and instruments intended for speculation.
XAU₮ terms confirmed in the certificate
Certification is based on several verified conditions.
- Physical possession: The issuer, TG Commodities, SA de CV, physically owns the gold.
- Auditability: Reserves are completely transparent and available for verification.
- No use: The financial structure does not contain an element of interest (usury).
- No leverage: The system excludes leverage and synthetic products.
- Full disclosure: Asset support remains completely transparent.
These points are consistent with the well-established prohibitions against usury and excessive uncertainty.
Position within Islamic finance and digital assets
Islamic finance continues to expand as one of the fastest growing areas in global capital markets. gold It has cultural and functional importance in many places with large Muslim populations. Until recently, there were only a few digital gold currencies that were also compatible with religious standards. Thus, the current certification bridges the gap between traditional asset preferences and current blockchain systems.
“Gold has always represented stability and trust across cultures and generations,” said Paolo Ardoino, CEO of Tether. “With XAU₮ now recognized as Shariah-compliant, we are expanding access to digital gold in a way that respects the principles of Islamic finance while leveraging the transparency and efficiency of blockchain technology.”
Potential applications of XAU₮
Some potential applications include Islamic banking offerings, takaful products, approved savings products, use as collateral in trade-related transactions, and allocation within long-term wealth management products. Since the symbol represents an actual mineral and not an artificial claim, it maintains properties that were historically considered acceptable under Islamic principles.
Expected regional focus
Geographical attention should initially be directed towards the GCC countries, where Islamic finance structures are widely present. More interest can be seen in certain parts of South Asia and Africa, where gold has traditionally been a popular place to save and where digital financial instruments are being adopted. International centres, which have dedicated Islamic finance centres, can also review the token for institutional wallets.
Continued cooperation and information
Amanah Advisors plans to continue providing its services to Tether after obtaining the first certification. The partnership will discuss practical issues when moving a token to secondary markets, such as governance standards and guidelines. Tether will provide explanatory content in several languages and regional promotions for institutional and individual participants to accompany the process.
Wider implications
The development is an example of one way blockchain representations of real assets can fit within existing ethics and legal constraints. Whether wider adoption occurs will depend on regulatory clarity, market demand, and continued adherence to now officially recognized standards.
More broadly, this case demonstrates how commodity tokenization can be designed to not include features that have traditionally made many digital instruments unsuitable for Islamic finance. At the same time, it highlights that compliance is not a single event. Constant monitoring, clear reporting, and governance structures will be needed to maintain the token’s standing as it continues to scale.
