Tether is shutting down Alloy by Tether and its gold-backed aUSDT stablecoin after weak adoption. Users must redeem collateral before Sept. 17, 2026
Tether is shutting down Alloy by Tether, its experimental platform that allowed users to mint aUSDT, a dollar-pegged stablecoin backed by gold. The decision comes just two years after the platform launched.
The company said new aUSDT minting will stop immediately, while existing users have until September 17, 2026, to redeem their holdings and withdraw collateral.
Tether said the decision followed a review of user activity, market demand, and the company's broader business priorities.
According to the company, Alloy by Tether was created to explore how tokenized assets backed by Tether Gold (XAUT) could work in real-world markets. Its flagship product, aUSDT, allowed users to mint a dollar-pegged token by locking more value in XAUT than the amount of aUSDT issued.
The platform generated useful insights into tokenized gold, collateralized digital assets, and real-world asset adoption. Despite this, user adoption remained low.
Data from Alloy's website shows that aUSDT currently has a market capitalization of only about $1.27 million. The token is backed by approximately 14.73 kilograms of gold valued at around $2.2 million.
Compared to Tether's larger products, those numbers remain very small. As a result, the company decided to redirect resources toward products showing stronger growth and liquidity.
The biggest challenge for aUSDT was simple: users already had alternatives.
Most stablecoin users looking for dollar exposure prefer traditional stablecoins such as USDT or USDC because they are widely accepted across exchanges, payment platforms, and decentralized finance applications.
Meanwhile, investors seeking gold exposure could simply buy XAUT directly.
This left aUSDT sitting between two markets. It was neither a pure gold investment nor a mainstream dollar stablecoin.
The result was limited adoption despite offering a unique structure backed by physical gold.
Meanwhile, the overall stablecoin market has also become increasingly competitive. New players such as Ripple's RLUSD, PayPal's PYUSD, Circle's USDC, and various regulated stablecoins are all competing for market share.
Many projects are now focusing on payments, cross-border transfers, tokenized assets, and institutional settlement rather than niche collateral models.
Tether said current users will still be able to redeem their aUSDT and recover their XAUT collateral during the transition period.
However, there is an important deadline. Users must close their positions and withdraw collateral before September 17, 2026.
After that date, holders who fail to redeem their aUSDT will no longer be able to recover their underlying XAUT through the platform. The company has already stopped allowing new positions and new token issuance.
This is not the first time Tether has discontinued a product. Earlier this year, the company ended support for CNHT, its Chinese yuan-backed stablecoin, citing weak demand.
Before that, Tether also phased out EURT, its euro-backed stablecoin, following changing market conditions and regulatory developments in Europe.
At the same time, Tether continues exploring new opportunities. In May, the company announced plans to launch GELT, a stablecoin tied to Georgia's national currency.
These moves suggest Tether is becoming more selective about where it allocates capital and development resources.
While Alloy is closing, Tether's overall business continues to grow rapidly. USDT remains the world's largest stablecoin with more than $186 billion in circulation. The token dominates global crypto trading by nearly 70% and is widely used for payments, remittances, and digital asset settlements.
At the same time, Tether's gold-backed token XAUT continues gaining investors attention. According to company data, XAUT now has a market value of roughly $3 billion and is backed by more than 22,000 kilograms of physical gold.
That difference helps explain Tether's decision. While aUSDT held only $1.27 million in market value, XAUT has grown into one of the largest tokenized gold products in the world.
The company recently expanded XAUT's availability into new markets, including Thailand, where demand for gold-backed digital assets continues to rise.
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