Hayes: FIMA repo, Japan Treasuries could lift bitcoin

On Aug. 10 Arthur Hayes, the BitMEX co-founder, published a Substack essay titled “Yen-quake” in which he outlined how coordinated action by Washington and Tokyo could strengthen the yen and increase dollar liquidity that might prop up bitcoin and other risk assets. He argued the dollar-yen rate has become a political concern for both governments.

Hayes described the Federal Reserve’s Foreign and International Monetary Authorities (FIMA) repo facility as a way for foreign official holders of U.S. Treasuries to temporarily exchange that collateral for dollars through the Fed instead of selling Treasuries on the open market. He noted the Japanese government holds about $1.143 trillion in U.S. Treasuries and the Government Pension Investment Fund (GPIF) holds roughly $230 billion, a combined $1.373 trillion of potential collateral.

Current rules limit FIMA repo use to roughly $60 billion per counterparty. Hayes cited recent comments from Treasury officials indicating the cap could be raised, which would allow Japan to obtain larger dollar amounts via the facility. He pointed to a recent coordinated foreign-exchange intervention in which U.S. and Japanese authorities reportedly spent about $100 billion attempting to influence the exchange rate.

Hayes outlined three paths Tokyo could use to push the yen higher: a significant tightening by the Bank of Japan; the GPIF shifting funds from overseas assets to domestic holdings; or the Ministry of Finance pledging Treasuries to obtain dollars and then using those dollars to buy yen. He said wider use of the FIMA repo facility could strengthen the yen without forcing Japan to sell Treasuries openly.

On the connection to bitcoin, Hayes argued that if the Fed expands facilities or its balance sheet to accommodate greater FIMA repo activity, the added dollars would not remain confined to foreign-exchange operations. He contended that increased dollar liquidity tends to flow into global asset prices, including equities and cryptocurrencies such as bitcoin.

Hayes acknowledged political limits and uncertainty, noting that intervention is a policy choice that can be delayed or reversed if Washington or Tokyo change priorities. He stopped short of predicting formal agreements or precise timing, and observers point to existing limits on FIMA usage and the historical difficulty of timing large coordinated interventions.