(Bloomberg) -- Stablecoin issuer Circle Internet Financial Ltd. entered into a pact with SBI Holdings Inc. to circulate the USDC token in Japan, which is vying with the likes of Singapore and Hong Kong to develop a digital-asset hub.

SBI Holdings, a venture capital group and financial services provider, will also work with Circle on establishing a banking relationship and promoting the use of Circle’s web3 services in Japan, according to a statement Monday. Web3 refers to a vision of the internet built around crypto and blockchain technology.

Circle’s Co-Founder Jeremy Allaire said the memorandum of understanding is a “significant milestone in Circle’s expansion plans in Japan and Asia Pacific.” SBI Holdings’ Tokyo-based Chief Executive Officer Yoshitaka Kitao added Japan “is steadily preparing the groundwork for the full-scale introduction of stablecoins.”

Stablecoins, key parts of the crypto market, are typically pegged 1-1 to major currencies and backed by reserves like cash and bonds. Some have veered from their pegs, prompting regulators to step up scrutiny of the risks they may pose. The tokens are used to park funds between trades and can be lent out to earn interest, with about $129 billion in circulation overall, CoinGecko data shows.

Competition for stablecoin business is intensifying in Asia. Japan’s stablecoin law — one of the first among major economies — became operative in June. Singapore recently awarded a batch of in-principle license approvals to stablecoin issuers. A dedicated rulebook is due in Hong Kong by next year.

The stablecoin market is dominated by Tether Holdings Ltd., which has $89 billion worth of tokens in circulation, followed in second spot by Circle’s USD Coin — or USDC — on $25 billion.

SBI Shinsei Bank Ltd. will provide banking services to Circle, enabling USDC access and liquidity for Japan-based users, according to Monday’s statement. 

(Updates with more details from the statement from the third paragraph.)

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