Tether Leads the Round in the UAE’s KAIO with $8M: Injecting USDT into BlackRock’s Tokenized Fund

According to a CoinDesk report, the Abu Dhabi tokenization platform KAIO announced on 4/20 that it has completed an $8 million strategic round of financing. Tether led the round, with Systemic Ventures participating jointly. Total funding to date has reached $19 million. The funds will be used to put institutional funds from firms such as BlackRock, Brevan Howard, Hamilton Lane, and others onto the blockchain as tokenized assets, and to introduce USDT stablecoin liquidity into regulated investment products within the UAE regulatory framework.

This marks Tether’s first direct investment in tokenization infrastructure in the Middle East, and also a key milestone for the USDT ecosystem to extend its reach from dollar trading to a “Middle East sovereign wealth channel.”

What KAIO does: breaks down BlackRock-level funds into smaller units on-chain

KAIO provides asset management institutions with a suite of tokenization and on-chain distribution tools. It packages traditional institutional funds into on-chain, tradable receipts, lowering the minimum investment threshold to $100. Strategies from BlackRock, Brevan Howard, and Hamilton Lane—previously accessible only to accredited investors—can now be subscribed to by retail and emerging-market investors through the KAIO framework.

The historical trading volume disclosed by the official figures is already over $500 million, and current assets under management are slightly under $100 million. The funding in this round will be used to expand into the tokenization of credit, structured products, and ETFs, and it plans to partner with Abu Dhabi sovereign fund Mubadala Capital to launch on-chain funds.

Investor lineup: Tether and Middle East sovereign capital at the same table

The round’s lead investor, Tether, is the world’s largest stablecoin issuer, with USDT’s market cap already exceeding $150 billion; the co-investor, Systemic Ventures, participated for the first time. Previously, investors included Further Ventures, Laser Digital, Brevan Howard Digital, Lyrik Ventures, Karatage, and the UAE local venture capital firm Shorooq Partners.

This combination means KAIO is not a typical DeFi startup case, but rather a “cross-domain infrastructure” project that ties together a stablecoin issuer, Middle East sovereign-backed institutional players, and the digital-asset departments of European and American hedge funds.

USDT’s RWA strategy: from a trading medium to a “funding entry point”

In recent years, Tether has invested heavily in the real economy and off-chain infrastructure, including energy in South America and fintech in Africa. The significance of this investment lies in directly connecting USDT to regulated funds in the Middle East, so that USDT becomes a “settlement currency for tokenized investment products” in addition to its role as a stablecoin.

Against the backdrop of BIS’s recent call for globally coordinated stablecoin regulation and warnings that Tether and Circle together account for 85% of the market while showing “securities-like characteristics,” Tether’s strategy is clear: by deeply channeling USDT through regulated RWA pathways, it locks USDT’s use into compliant scenarios and reduces the risk of a single sovereign being able to cut off access.

UAE regulation is key: compliant tokenization under the VARA framework

KAIO’s tokenization products operate under a dual-regulatory framework involving the UAE’s VARA (Virtual Asset Regulatory Authority) and ADGM (Abu Dhabi Global Market), ensuring that tokenized investment funds have clear investor identity verification and KYC/AML processes. This contrasts with the tokenized asset trading framework for VATP recently announced by the Securities and Futures Commission of Hong Kong, showing that regulators across Asia-Pacific and the Middle East are pushing tokenization from “gray areas” toward regulated financial products.

KAIO’s founder, Abdelaziz Farahat, said: “We see traditional asset management and the crypto ecosystem gradually integrating. Institutional capital going on-chain is no longer a theory—it’s a workable infrastructure.”

Regional significance: the Middle East becomes the next main battlefield for RWA tokenization

Middle East sovereign funds and family offices together manage assets totaling more than $3 trillion. If 5%–10% of that flows into tokenized products, the RWA market will jump from the hundreds of billions to the trillion scale. Mubadala Capital, ADIA, and other Abu Dhabi sovereign funds have continued investing in crypto and AI infrastructure over the past two years; this time, working with KAIO will be the first time to put the funds themselves directly on-chain.

In Japan, there are also parallel efforts, including launching the Canton network verification project and testing government bonds as digital collateral, indicating that major financial centers across regions are moving toward the same goal along their own regulatory tracks: making institutional-grade assets into on-chain digital certificates that can be split and traded.

This article, “Tether Leads Investment in Abu Dhabi’s KAIO 8 Million: Injecting USDT into BlackRock Tokenized Funds,” first appeared on Chain News ABMedia.