Tokenized gold has become a $5.7 billion market, according to CoinGecko. But owning gold on a blockchain is only one part of the opportunity. What happens when that same gold can be used to borrow, move liquidity, or support other financial products?
On November 6, Coinbase introduced USDC loans backed by PAX Gold (PAXG), powered by Morpho on Base. It became the first non-crypto collateral asset supported by Coinbase Borrow.
The concept itself isn’t new. Several platforms already offer loans against tokenized gold. What’s more interesting is how quickly an existing lending product can expand to include an entirely different asset class.
And that raises a bigger question: Are we reaching the point where the usefulness of tokenized assets matters more than tokenization itself?
Gold is moving beyond buy, hold, and sell
Gold has traditionally played a relatively passive role in investment portfolios. Investors buy it for diversification, inflation protection, or long-term value preservation.
Accessing liquidity from those holdings often means selling part of the position or arranging a collateralized loan through a financial institution.
Tokenization introduces another option.
Assets such as PAXG and Tether Gold (XAUt) represent ownership or claims linked to physical gold held in custody. Because these tokens can move across supported blockchain networks, they can also interact with financial applications.
A holder can potentially:
Retain exposure to gold while borrowing stablecoins against it.Transfer eligible collateral between compatible platforms without moving physical gold.Use borrowed liquidity for payments, investments, or other purposes without immediately selling the underlying position.
This doesn’t eliminate the costs of borrowing or the possibility of liquidation. It changes how the asset can be accessed and used.
And the demand for digital gold is becoming harder to ignore. The World Gold Council reported that tokenized gold generated $90 billion in cumulative spot trading volume in Q1 2026, exceeding the volume recorded during all of 2025.
The next opportunity is to connect that trading activity with broader financial services.
Coinbase demonstrates the value of reusable infrastructure
The most interesting part of Coinbase’s announcement may not be gold at all.
Before introducing PAXG, Coinbase Borrow already supported loans against assets including BTC, ETH, XRP, and SOL through Morpho.
According to Morpho, the integration had approximately $3.4 billion in collateral and over $1.7 billion in active loans when the gold-backed product launched.
Rather than developing an entirely separate lending system, Coinbase introduced a new PAXG/USDC market on Base.
The existing infrastructure provides the foundation for lending operations, while Coinbase offers access through its familiar application.
For financial platforms, this illustrates an important distinction.
Building a product around one asset is different from building infrastructure capable of supporting multiple asset classes.
The second approach can make future expansion easier. New collateral types still require liquidity, pricing mechanisms, and appropriate risk parameters, but the platform doesn’t necessarily have to recreate the entire lending experience.
The real opportunity may be adding new financial products without rebuilding the infrastructure behind every launch.
The market already offers several approaches
Coinbase isn’t entering an empty market. Gold-backed borrowing already exists across decentralized protocols, exchanges, and specialized lenders.
However, these products aren’t interchangeable.
Aave: decentralized borrowing
Aave supports PAXG and XAUt as collateral in eligible lending markets. Users can borrow stablecoins through smart contracts, with positions monitored according to the protocol’s risk parameters.
Binance: exchange-based lending
In March 2026, Binance added XAUt as eligible collateral for Flexible Rate Loans and VIP Loans. This connects gold-backed borrowing to an existing exchange lending ecosystem.
Nexo: flexible credit lines
Nexo supports PAXG and XAUt as collateral for crypto-backed credit lines, giving eligible customers access to liquidity without selling their tokens.
Arch Lending: larger collateralized loans
Arch accepts both PAXG and XAUt for eligible USD and USDC loans, with a published minimum borrowing amount of $250,000 and defined loan terms.
These examples illustrate different models serving different needs. A DeFi user may prioritize direct interaction with lending markets, while an institutional borrower may value negotiated terms and a more structured lending relationship.
For platforms developing financial products, the takeaway is similar: the same tokenized asset can support different business models depending on the infrastructure surrounding it.
More liquidity doesn’t mean less complexity
Using gold as collateral may sound relatively conservative compared with borrowing against volatile cryptocurrencies. But price stability is only one part of the equation.
Consider a simplified example:
An investor deposits $10,000 worth of tokenized gold and borrows $5,000 in stablecoins. The initial loan-to-value ratio (LTV) is 50%.
If gold falls by 20%, the collateral is now worth $8,000, and the LTV rises to 62.5%, even before accounting for accrued interest. The loan becomes more exposed despite the borrower taking no additional funds.
For financial platforms, several questions therefore matter:
Collateral management: How are prices updated, and when can liquidation occur?Liquidity: Can the token be sold efficiently if a position needs to be closed?Custody and redemption: Who holds the underlying gold, and what rights does the token provide?Borrowing economics: Do interest rates, fees, and collateral requirements make the product worthwhile?
Tokenized gold also introduces an interesting operational difference: blockchain lending markets can operate continuously, while the underlying gold market follows its own trading schedule.
Managing that difference requires reliable price feeds and carefully designed collateral rules.
The benefit of tokenization is not that these considerations disappear. It’s that more of the lending process can be integrated into digital financial infrastructure.
5. What comes after gold?
Gold is a useful starting point because it has an established market, recognized valuation methods, and a familiar role as collateral.
But the broader application extends well beyond precious metals.
Tokenized Treasury securities, money market funds, and other eligible financial assets could potentially become collateral within similar lending arrangements, subject to their legal structures and market conditions.
For fintech companies, this creates an interesting product question.
If customers already hold tokenized assets on a platform, should those balances remain available only for trading and transfers? Or could they support additional financial services?
The answer depends on customer demand, the economics of lending, regulatory requirements, and the complexity of integration.
Not every platform needs to launch collateralized loans. And not every tokenized asset has enough liquidity or reliable pricing to support them.
But Coinbase’s latest expansion shows how an existing credit infrastructure can accommodate new collateral markets without requiring an entirely new product architecture.
That may be the more important shift to watch.
The next stage of tokenization won’t be measured only by how much traditional wealth moves onchain. It will also depend on how much financial activity those assets can support once they get there.
Disclaimer: This is not financial or investment advice. DYOR before making any decisions. Use at your own risk.
Gold-Backed Loans Are Growing. The Bigger Opportunity Is Behind Them was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.