Tokenized gold: PAXG and the MiCA gap in the EU

Anyone holding tokenized gold through a European exchange is losing that position right now: Coinbase is ending support for 14 tokens for retail customers in the European Economic Area, and alongside the familiar dollar stablecoins that list also carries PAXG. The cut-off date is October 30. Whatever is left in the account after that, the exchange converts into USDC on its own initiative, so into a dollar token. A claim on gold turns into a claim on dollars, and the holder does nothing to bring it about.

The reason sits in the rulebook rather than at the exchange. Under the EU's MiCA regulation, gold tokens fall into a category of their own, and to this day not one issuer holds an authorization in that category. This article sets out what PAX Gold actually is, why a gold bar becomes a regulatory problem case, which routes remain open to investors in Germany, and what the forced swap means for tax.

What PAX Gold is: one token for one troy ounce in a London vault

PAX Gold, PAXG for short, is a token on the Ethereum blockchain that represents one troy ounce of physical gold per unit. The troy ounce is the trading measure of the gold market and equals 31.1035 grams of pure gold. On its own product page, the issuer Paxos states that each token stands for one troy ounce of a gold bar meeting the London Good Delivery standard, stored in vaults of the London Bullion Market Association. On that account, anyone holding PAXG has ownership rights in the underlying gold, held in custody by Paxos Trust Company.