Tether has backed Abu Dhabi-based tokenisation platform KAIO in an $8 million strategic funding round, a deal that underlines how Gulf financial centres are trying to move regulated investment products on to blockchain rails rather than keeping digital assets confined to speculative trading. The round lifts KAIO’s total funding to $19 million and brings in Tether alongside Systemic Ventures and existing investors including Further Ventures and Laser Digital.
KAIO’s pitch is straightforward but ambitious: take professionally managed funds that would normally sit behind high minimum tickets and legacy distribution systems, and package them in tokenised form so they can be accessed more easily by a broader pool of qualified investors. The company says it is building infrastructure that allows institutional asset managers to issue and distribute funds onchain, with smaller entry points that can go as low as $100. Reports on the transaction say KAIO has already worked with products linked to names such as BlackRock, Brevan Howard, Hamilton Lane and Laser Digital, and is seeking to expand into credit, structured investments and exchange-traded products.
The investment is also another marker of Tether’s widening ambitions in the Gulf. Long known as the issuer of the world’s largest dollar-backed stablecoin, the company has spent the past two years positioning itself more deeply inside the UAE’s digital asset ecosystem. It announced plans in 2024 to develop a dirham-pegged stablecoin with local partners, and its USDT token later gained recognition for use on several blockchains within Abu Dhabi Global Market. That gives the KAIO deal a significance beyond venture financing: it ties stablecoin liquidity, regulated tokenised products and Abu Dhabi’s financial infrastructure into a single strategic push.
For Abu Dhabi, the transaction fits a broader effort to turn the emirate into a hub for institutional digital finance rather than only a home for exchanges and trading firms. KAIO has been presented as an Abu Dhabi-regulated business, and the company has already signalled work with Mubadala Capital to explore digital access to private market investments. That matters because tokenisation has moved beyond pilot projects and is now targeting the machinery of mainstream asset management: fund administration, transferability, compliance checks and cross-border distribution. In that sense, the UAE is competing not only with crypto-native jurisdictions but also with Singapore, Hong Kong and parts of Europe that are trying to capture the next layer of digital capital markets.
The attraction is easy to see. Tokenised funds promise faster settlement, round-the-clock transferability, automated compliance and the possibility of fractional ownership in products that have typically been hard for smaller investors to reach. Industry projections remain expansive, with some estimates putting tokenised real-world assets in the trillions of dollars over the coming decade. One widely cited forecast developed with Boston Consulting Group projected the tokenised real-world asset market could grow from about $0.6 trillion to $18.9 trillion by 2033, with around $9.4 trillion by 2030. Even if those numbers prove optimistic, the direction of travel is clear enough to keep capital flowing into the sector.
Yet enthusiasm still runs ahead of market reality. Large banks and asset managers have spent years testing tokenised bonds, deposits and funds, but adoption has been slower than early forecasts suggested. One persistent obstacle is liquidity: putting an asset onchain does not by itself create a deep secondary market. Academic and industry work has also pointed to structural frictions, including fragmented networks, regulatory gating, custody requirements and limited trading activity for many tokenised products. Those constraints help explain why platforms such as KAIO are focusing less on rhetoric about financial revolution and more on the plumbing of regulated distribution.
That tension between promise and execution will shape how this funding round is judged. Backers can point to KAIO’s traction, with market reports indicating the firm has processed more than $500 million in transactions and built a base of assets under management around the $100 million mark. Sceptics, however, will ask whether tokenised funds can scale beyond a narrow institutional niche and whether investor protection, redemption rights and legal clarity will keep pace with product design. Regulators globally are already warning that stablecoins and onchain finance cannot be allowed to expand inside inconsistent rulebooks, especially when cross-border products are involved.
KAIO’s pitch is straightforward but ambitious: take professionally managed funds that would normally sit behind high minimum tickets and legacy distribution systems, and package them in tokenised form so they can be accessed more easily by a broader pool of qualified investors. The company says it is building infrastructure that allows institutional asset managers to issue and distribute funds onchain, with smaller entry points that can go as low as $100. Reports on the transaction say KAIO has already worked with products linked to names such as BlackRock, Brevan Howard, Hamilton Lane and Laser Digital, and is seeking to expand into credit, structured investments and exchange-traded products.
The investment is also another marker of Tether’s widening ambitions in the Gulf. Long known as the issuer of the world’s largest dollar-backed stablecoin, the company has spent the past two years positioning itself more deeply inside the UAE’s digital asset ecosystem. It announced plans in 2024 to develop a dirham-pegged stablecoin with local partners, and its USDT token later gained recognition for use on several blockchains within Abu Dhabi Global Market. That gives the KAIO deal a significance beyond venture financing: it ties stablecoin liquidity, regulated tokenised products and Abu Dhabi’s financial infrastructure into a single strategic push.
For Abu Dhabi, the transaction fits a broader effort to turn the emirate into a hub for institutional digital finance rather than only a home for exchanges and trading firms. KAIO has been presented as an Abu Dhabi-regulated business, and the company has already signalled work with Mubadala Capital to explore digital access to private market investments. That matters because tokenisation has moved beyond pilot projects and is now targeting the machinery of mainstream asset management: fund administration, transferability, compliance checks and cross-border distribution. In that sense, the UAE is competing not only with crypto-native jurisdictions but also with Singapore, Hong Kong and parts of Europe that are trying to capture the next layer of digital capital markets.
The attraction is easy to see. Tokenised funds promise faster settlement, round-the-clock transferability, automated compliance and the possibility of fractional ownership in products that have typically been hard for smaller investors to reach. Industry projections remain expansive, with some estimates putting tokenised real-world assets in the trillions of dollars over the coming decade. One widely cited forecast developed with Boston Consulting Group projected the tokenised real-world asset market could grow from about $0.6 trillion to $18.9 trillion by 2033, with around $9.4 trillion by 2030. Even if those numbers prove optimistic, the direction of travel is clear enough to keep capital flowing into the sector.
Yet enthusiasm still runs ahead of market reality. Large banks and asset managers have spent years testing tokenised bonds, deposits and funds, but adoption has been slower than early forecasts suggested. One persistent obstacle is liquidity: putting an asset onchain does not by itself create a deep secondary market. Academic and industry work has also pointed to structural frictions, including fragmented networks, regulatory gating, custody requirements and limited trading activity for many tokenised products. Those constraints help explain why platforms such as KAIO are focusing less on rhetoric about financial revolution and more on the plumbing of regulated distribution.
That tension between promise and execution will shape how this funding round is judged. Backers can point to KAIO’s traction, with market reports indicating the firm has processed more than $500 million in transactions and built a base of assets under management around the $100 million mark. Sceptics, however, will ask whether tokenised funds can scale beyond a narrow institutional niche and whether investor protection, redemption rights and legal clarity will keep pace with product design. Regulators globally are already warning that stablecoins and onchain finance cannot be allowed to expand inside inconsistent rulebooks, especially when cross-border products are involved.
Topics
Cryptocurrency