Arthur Hayes Sees a New Bitcoin Liquidity Boost From Japan

BitMEX co-founder and Maelstrom CIO Arthur Hayes (@CryptoHayes) is making the case that Washington's effort to shore up the Japanese yen could unleash a wave of dollar liquidity that ultimately finds its way into $BTC.

The FIMA Mechanism Hayes Is Watching

The argument centres on the Federal Reserve's Foreign and International Monetary Authorities (FIMA) repo facility. Following one of the most dramatic currency-market interventions in decades, a joint US-Japan effort in late July to bolster the weakening yen, Treasury Secretary Scott Bessent urged the Fed to expand the FIMA facility, which would allow Japan to use Treasuries as collateral to borrow dollars that could then be used to buy yen.

Hayes says Japan could tap this route using part of its massive Treasury stockpile. Upsizing the cap might allow Japan to fund yen purchases without having to sell any of its $1.14 trillion of Treasury holdings, the largest of any foreign power. That matters because Bessent wants the FIMA facility expanded so Japan can raise dollars without selling Treasuries outright, since selling them could push yields higher and add pressure to US borrowing costs.

The FIMA facility currently allows foreign authorities to borrow up to $60 billion in short-term funds using US Treasuries as collateral. Bessent argued in a CNBC interview that when FIMA was first launched six years ago, the bond market was much smaller, making it reasonable for the Fed to consider upsizing the facility.

Why Hayes Thinks $BTC Benefits

For Hayes, the key insight is what happens to the dollars created through this process. Increasing FIMA repo activity means more dollar liquidity in global markets, and he argues this form of money printing benefits Bitcoin and other cryptocurrencies. He says joint foreign-exchange market intervention by the US and Japan, along with discussion of an expanded FIMA repo limit, points to a policy shift that could become a powerful bullish driver for the digital-asset market.

Hayes has drawn on historical precedent to support the view. During the pandemic, the Fed's balance sheet expanded sharply and $BTC surged from under $10,000 to nearly $69,000. His thesis is straightforward: fiat liquidity, specifically the printing of more units of fiat money, is the primary driver of Bitcoin's value proposition. A Japan-focused liquidity move, he believes, could follow a similar pattern.

Whether the Fed agrees to expand the facility is far from settled. Any change to the FIMA cap would require approval from a majority of the Federal Open Market Committee. Critics also note that lifting the FIMA caps could complicate efforts to shrink the Fed's balance sheet, since heavy FIMA usage would add to Fed holdings at least on a temporary basis. For now, the Fed has declined to comment on Bessent's request.

Sources:
CNBC: How Bessent is pushing the Fed to expand the FIMA backstop for Japan's yen defense
Bloomberg: Why Bessent Wants the Fed to Expand the FIMA Backstop
Crypto Briefing: Scott Bessent champions Federal Reserve facility to support yen