Crypto exchange Binance is teaming up with Japan’s largest bank, the Mitsubishi UFJ Trust and Banking Corporation (MUTB), to explore the issuance of stablecoins in Japan.

On Sept. 25, Binance Japan announced a joint study that aims to see the companies issue yen and other fiat stablecoins to accelerate Web3 adoption in Japan. The pair plan to utilize a platform called “Progmat Coin” which would be a Japanese regulatory-compliant stablecoin issuance and management system.

The Japanese bank would be pioneering the development of the "Progmat Coin" platform as infrastructure for issuing stablecoins in accordance with Japan’s recently revised and enforced Payments Services Act. The legislation, which took effect in June, allows Japanese banks and regulated crypto providers to issue stablecoins.

The platform supports stablecoin issuance on Ethereum but may be expanded to include BNB Chain through the partnership with Binance, Binance said in a statement. 

In a statement the general manager of Binance Japan, Takeshi Chino, said stablecoins are vital for the broader financial ecosystem. In addition to providing lower-cost and instantaneous cross-border trade settlement for businesses, they also facilitate seamless crypto transactions for retail investors, he added.

Stablecoins fill an important financial services need and are crucial for the success of Web3 adoption.

According to Tatsuya Saito, MUFG’s vice president of product, Japan’s stablecoin market has the potential to grow to as large as $34 billion (5 trillion yen). This equates to around 27% of the estimated current global market which is $123.7 billion, according to CoinGecko.

Binance, which has faced a mountain of regulatory pressure in the West, started offering 34 tokens at the launch of its services for the Japanese market in August 2023.

Meanwhile, Japan's Orix Bank is reportedly also weighing plans to issue stablecoins in the country.

Orix aims to begin testing yen, dollar, and other stablecoins in October eyeing a 2024 launch. They will be backed by fiat deposits utilizing the Japan Open Chain blockchain developed by Tokyo-based G.U. Technologies and partners.

Japan appears well poised to roll out stablecoins for payment rails. In August, Cointelegraph reported that Japanese blockchain startup Soramitsu was exploring a new stablecoin exchange for a cross-border payment system for Asian countries.

Earlier this month, the Japanese government reportedly planned to permit startups to raise public funds through the issuance of crypto assets and stablecoins.