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Why Binance and Banking Giant MUFG Want to Issue Stablecoins in Japan

By Sandali Handagama

Binance Japan and Mitsubishi UFJ bank want to help with the country's Web3 ambitions by issuing stablecoins.

Binance’s Japan unit on Monday said it’s working with financial giant Mitsubishi UFJ Trust and Banking Corporation (MUTB) on developing stablecoins.

MUTB and Binance Japan are running a joint study on issuing stablecoins pegged to sovereign currencies like the yen that comply with local laws – but the stated goal is driving Web3 adoption in the country.

“Through this joint study, both companies aim to issue new stablecoins to help accelerate the mass adoption of Web3 in Japan,” a press release said, adding that the companies hope to start relevant operations by the end of next year.

The study does not translate to a promise to issue stablecoins, and Binance Japan still has to secure “applicable regulatory approvals” before issuing anything. However, Japan’s Web3 ambitions and new stablecoin rules may actually set the necessary conditions for incubating such a project.

Involvement of a TradFi giant like MUTB also adds some legitimacy to the initiative as it leads a consortium of banks and trust banks that plans to issue stablecoins on private and public blockchains through a compliant platform called Progmat Coin, which Binance Japan also intends to use.

The platform has permissions under new stablecoin rules that kicked in this June that let Japanese exchanges apply for a special license to trade stablecoins – even those issued overseas, like tether (USDT) and USD Coin (USDC). In fact, USDC issuer Circle hinted it may take advantage of the new rules to make the stablecoin available to the Japanese market.

Other jurisdictions like the European Union and even the U.K. have taken more stringent approaches to regulating stablecoins, particularly after one such cryptocurrency, terraUSD, rapidly lost parity with the U.S. dollar last year, leading to the collapse of not just the issuer but a string of other prominent players in the crypto world.

Japan has seemingly embraced Web3 and stablecoins where other jurisdictions have shied away, with the country publishing a roadmap to drive Web3 growth back in April and promising more oversight to ensure consumer protections.

MUTB also claims its Progmat platform could help mitigate some of the risks inherent in stablecoins that regulators fear.

“Progmat is a neutral infrastructure that enables the issuance of various brands of stablecoins with the greatest flexibility of use and the least risk of de-pegging,” Tatsuya Saito, founder and CEO of Progmat Inc and vice president of product at MUTB said on a Monday press release.

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