How Tokenization Could Let Gold Challenge the Eurodollar

Most investors assume the Eurodollar system is safe because nobody has built a better money. The real barrier to rival currencies has never been the quality of the alternative; it has been how hard the alternative is to use.

Jeff Snider, a long-time Eurodollar analyst, argues that Wall Street’s momentum money has already rotated from crypto to AI. Meanwhile, the tokenization of real assets such as Treasuries and gold has quietly built genuine utility.

That matters if you hold gold and wonder whether its monetary role is more than price speculation. Here is what lowers the barrier for rival currencies, where the Eurodollar is actually vulnerable, and what gold would need to compete as money.

The piece also weighs Snider’s “challenge” view against the more cautious “complement” evidence from institutions such as the Bank for International Settlements (BIS) and the International Monetary Fund (IMF).

Why has tokenization replaced crypto as the story worth watching?

You probably remember the crypto story: the ETF launches, the price spikes, the promise of replacing the dollar and central banks. Snider calls that momentum money, capital that arrived with the trend and left when AI became the hotter theme.

Underneath, something less glamorous kept growing. Tokenization is the process of turning a claim on a real asset, such as a Treasury fund or gold, into a digital token that can be held and moved electronically. Snider notes that a single wallet could hold gold, dollars or yen.

Ben Nadle compares tokenization to early exchange-traded funds, which were dismissed before becoming ubiquitous. BlackRock chief Larry Fink has spoken of “tokenizing everything.”

Sources differ on size because methodologies and dates differ, so treat these figures as estimates:

BUIDL launched in March 2024 and is reportedly deployed across eight blockchains. Tokenized gold rose about 30% in the quarter to the end of Q1 2026, dominated by PAXG and XAUT. That growth tells you the technology is being used for yield and collateral rather than hype, which is why it bears on how easily non-dollar assets could be held and moved.

What tokenization changes, and what it does not

The rails improve: settlement runs around the clock, collateral becomes programmable, and cross-border transfers carry less friction. For gold, that means a token is easier to hold, divide and pledge than a bullion account.

For gold, that means fractional digital gold tokens can be held, divided and pledged far more easily than a bullion account, and you can move them at any hour without waiting for a vault transfer.

The risk does not disappear. The BIS and IMF stress that a tokenized Treasury is still a dollar claim and a tokenized deposit is still a bank liability. They also warn of new operational, cyber and legal concentrations. Tokenization changes the pipes, not the currency flowing through them.

What makes the Eurodollar system so hard to displace, and where is it weak?

A Eurodollar is not simple state-issued cash. It is dollar-denominated money created on bank balance sheets outside the United States, and it won because it was easy to use. Snider points to card networks, point-of-sale terminals and back-office links such as repo markets before 2007.

Because the Eurodollar is created on bank balance sheets outside the United States, you can think of it as private credit denominated in dollars, which is why your dollar supply can tighten even when the Federal Reserve has not changed anything.

Network effects did the rest. Once invoicing, debt issuance and hedging are in dollars, each newcomer finds dollars cheaper and safer. The system’s strengths include:

• Usability across payments and trade
• Network effects in invoicing and debt
• Deep Treasury and repo markets
• Extensive hedging infrastructure

The dollar’s share of global reserves was 56.70% in Q2 2026, down from 57.18% in Q1, according to the IMF (30 September 2026). Earlier releases show revised figures for the same quarters. The BIS notes the dollar still holds roughly 60% despite gradual diversification.

Slow drift is not the weakness, though. Snider’s point is that liquidity is, and any new currency must handle it better than the Eurodollar did.

Snider’s liquidity test Jeff Snider argues the Eurodollar’s weak point is liquidity, so a rival currency has to do liquidity better than the Eurodollar did to earn its place.

Because Eurodollars are wholesale balance-sheet constructs, shortages can appear even when the nominal stock is large. Repo markets, which turn collateral into short-term dollar funding, transmit that stress through haircuts, collateral scarcity and counterparty fears.

The pattern tells you the vulnerability is not everyday convenience but what happens when funding dries up. That is the test any rival money, tokenized or gold-backed, will face.

How does tokenization let rival currencies compete, and what does gold need to qualify as money?

Why usability is the real barrier

Economists call it hysteresis: past choices lock in present behaviour. A better currency usually loses because nobody wants to build a payment network from scratch.

Snider’s thesis is that tokenization removes that burden, because rivals can ride existing payment rails. His analogy is Uber versus taxis: a clearly better option gets adopted.

El Salvador shows the limits. Snider says Bitcoin failed there on usability, and research adds that pricing and wages remain largely in dollars, with Bitcoin use sporadic. A BRICS currency faces a similar gap, since members still rely on dollar funding and invoicing.

Gold’s case and its limits

Gold traded around $5,000-$5,300 an ounce in early 2026 after a reported 64% rise in 2025 (Reuters, citing the World Gold Council (WGC); unverified). The WGC puts 2025 central-bank net purchases at 863 tonnes, while Kitco’s tally of officially reported data shows 328 tonnes. The gap reflects scope: the WGC includes unreported buying.

The supply limits behind gold as a reserve currency matter here: mined output grows slowly, so any large shift in central-bank demand can move prices sharply, which complicates its use as a stable unit of account.

Brookings, citing the WGC, says gold is roughly one quarter of global reserves by value. Strong buying tells you gold is valued as a hedge against dollar and debasement risk, but it does not show gold working as everyday money.

To judge any claim about gold as money, apply four tests:

1. Usable on existing payment rails
2. Deep liquidity in stress
3. Wide acceptance for earning and spending
4. Trusted custody and redemption

Challenge or complement: what does the evidence say so far?

Snider sees competition as healthy. He expects the dollar to persist, perhaps as a reserve stablecoin, but not as the sole money. The BIS and IMF view is that tokenization embeds the dollar system in new rails rather than overturning it.

Regulation will shape which tokens scale. The US GENIUS Act, signed on 18 July 2025, takes effect on the earlier of 18 January 2027 or 120 days after final rules. Under the EU’s MiCA regime, about 25 or more issuers were authorised by October 2026.

Scale tells its own story. Stablecoin supply is about $305 billion, dominated by dollar-denominated USDT and USDC, against roughly $5.6 billion in tokenized gold. For now, tokenized gold works better as a hedge and complement in a portfolio than as a replacement money you can rely on in a liquidity crunch.

Signals worth watching:

• Tokenized gold volumes
• Central-bank gold buying
• The dollar’s reserve share
• Whether any token handles a genuine funding stress

The central tension Lower usability barriers open the door, but liquidity decides who walks through.

Reading the signals: what to watch as gold, tokens and the dollar compete

The through-line is simple. Tokenization lowers the usability barrier, the Eurodollar’s weak point is liquidity in stress, and gold must solve both to function as money.

For now, treat gold as a reserve-style hedge, and track the signals above to see whether it gains real monetary function. Coexistence looks more probable than replacement, though these views are speculative and subject to change as markets develop.

This article is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with financial professionals before making investment decisions.