Arthur Hayes, co-founder of BitMEX, says U.S. and Japanese authorities may have identified a way to support the yen that avoids outright Treasury selling while still releasing large amounts of dollar liquidity into the market. His argument centers on the Federal Reserve’s Foreign and International Monetary Authorities, or FIMA, repo facility.
In Hayes’ telling, Japan’s Ministry of Finance could repo U.S. Treasuries held in reserve through FIMA, receive dollars from the Fed, then sell those dollars in the FX market to buy yen. The Treasuries would not need to be sold into the market, but the Fed’s balance sheet would expand as outstanding FIMA credit grows. Hayes says that matters because he sees a strong historical link between Fed balance-sheet expansion and higher prices for Bitcoin and gold.
He says he has already positioned for that outcome with large allocations to Bitcoin, physical gold and gold-mining shares, and he also offers views on Ether and Ethena’s ENA token.
A 2011 earthquake and Hayes’ yen template
Hayes begins with a personal account from March 2011, when he was sitting on Deutsche Bank’s trading floor at Hong Kong’s ICC building making markets in a basket of Hong Kong and Singapore-listed ETFs. News broke that Japan had been hit by a massive earthquake. Television coverage quickly shifted to Tokyo, then to the tsunami sweeping across northeastern Honshu, followed by images from Fukushima.
He recalls the Nikkei falling nearly 20% intraday while USD/JPY plunged toward 70, pushing the yen to one of its strongest levels since World War II. At the time, he was exposed to yen risk through dollar-denominated MSCI Japan ETFs. As the yen rose sharply, he says he could not hedge the FX risk quickly enough and ended up carrying the long USD/JPY exposure while traders kept hitting his bids.
What stuck with him was a veteran trader’s explanation: after a natural disaster, Japanese institutions, especially insurers, often rush to repatriate overseas capital to fund domestic needs. That means selling foreign stocks and bonds, largely U.S. assets, and bringing money back home. In Hayes’ framework, that repatriation is what makes the yen strengthen.
He says the market later stabilized, and in the rebuilding phase Shinzo Abe introduced what became known as Abenomics in 2012. Hayes describes the program as an explicit effort to weaken the yen through unlimited bond buying under yield curve control, aggressive fiscal expansion and changes at Japan’s Government Pension Investment Fund, or GPIF, that pushed the giant fund toward overseas stocks and bonds and away from domestic securities.
The result, he writes, was a yen devaluation of more than half. He points to the Bank of Japan’s swelling government-bond holdings and suppressed 10-year Japanese government bond yields as evidence of how the policy mix worked.
Why Hayes thinks the weak-yen era is ending
Hayes argues that the collapse in the yen’s international purchasing power helped lift global asset prices because the currency became a favored funding vehicle for corporates and speculators. Cheap yen, in his view, underpinned years of leverage across global markets.
He also says the policy came with domestic political and social costs in Japan. In the piece, he references the 2022 assassination of Shinzo Abe and places it in a broader discussion about inflation and the damage caused by currency debasement, while stating there is no direct connection between the two.
He adds a more recent anecdote from Hokkaido. During last year’s ski season, he says, USD/JPY at 160 made Japanese ski trips more than 50% cheaper than North America even after international airfare, a reflection of how far the currency had fallen.
His conclusion is that a decade-plus of weak, weaker and weakest yen pushed global assets higher, but the trade has reached its limit. Hayes calls the yen the most undervalued major currency in the world and says it has become a problem for Japan, the U.S. and China alike.
Three ways to make the yen stronger
Hayes lays out three possible mechanisms:
- The Bank of Japan could hike rates aggressively enough to erase the short-end yield differential against the dollar.
- Japanese authorities could push domestic and public institutions, including GPIF, to revise mandates and shift from foreign assets back into local assets.
- The Ministry of Finance could repo its U.S. Treasury holdings through the Fed’s FIMA facility, obtain dollars and use them to buy yen.
He says officials clearly prefer the third option.
Hayes points to a recent joint intervention by U.S. and Japanese monetary authorities, which he says took place two weeks ago. He also cites U.S. Treasury Secretary Bessent, who, according to Hayes, said he wanted the Fed to raise the counterparty limit on the FIMA repo facility so Japan’s Ministry of Finance could use its reserve assets to defend the yen. Hayes writes that Japan’s finance ministry also said it was working with the U.S. side to push USD/JPY lower.
Option one: BOJ rate hikes
On paper, Hayes says, the cleanest path is for the Bank of Japan to raise rates enough to narrow the gap with other major central banks. He puts the yield differential between dollar and yen assets at 2.75%. As long as borrowing yen, converting into dollars and buying U.S. Treasuries remains a positive carry trade, there is a built-in incentive for USD/JPY to stay high and for the yen to stay weak.
He says the problem is that the BOJ has become the largest holder of what he crudely describes as Japanese government bonds after more than a decade of yield curve control. The central bank printed yen to buy bonds and cap 10-year yields. If rates rise materially, bond prices fall and the BOJ’s mark-to-market losses expand.
Hayes argues the BOJ can absorb yen-denominated losses in theory, but not without consequence. At some point, he says, too much money creation risks undermining confidence in the currency itself and Japan’s ability to pay for imported energy, food and medicine. That, in his view, is why the BOJ has moved only in small steps.
He adds a political constraint. Japanese politicians rely on JGB issuance to finance budget deficits, and higher yields mean higher debt-service costs. That makes rapid rate hikes unattractive.
Hayes revisits the market shock of July 2024 to support the point. He says USD/JPY moved from 160 to 140 within days after BOJ Governor Kazuo Ueda unexpectedly hiked rates and signaled more to come. Leveraged trades built on short yen and long risk assets then unraveled, he writes, and both the Nasdaq 100 and the Nikkei fell more than 10%. Only after the BOJ said on Aug. 12 that it would consider market conditions when assessing future hikes did the pressure begin to ease, with the yen weakening and equities finding a floor.
For Hayes, that episode showed the BOJ is unwilling to absorb the acute market pain that an aggressive normalization cycle would bring.
Option two: force Japanese capital to come home
The second route is institutional repatriation. Hayes groups corporations and public-sector investors under the label “Japan Inc.” and argues that if the government signals clearly enough, many of them would comply by selling foreign assets and moving money back into Japan.
He cites an anecdote from the book House of Nomura, which says that after the 1987 crash, Japan’s Ministry of Finance instructed Nomura to buy U.S. stocks to support the market. Hayes uses that story to argue that Japanese firms often align with national priorities even when doing so is not the obvious shareholder-maximizing choice.
His key institution here is GPIF. Hayes says the fund, overseen by a bureaucratic board appointed by ministries, had its mandate changed in October 2014 after Abe spent years reshaping leadership to keep Abenomics alive. GPIF, which he says manages a portfolio worth $1 trillion to $2 trillion, then became a steady buyer of overseas equities and bonds funded by selling yen for dollars. In his view, that structural outflow gave speculators confidence that they could lever almost any financial asset with cheap yen and not worry about a sudden reversal in the currency.
Hayes says Japan’s finance minister, Katayama, recently stated in public that GPIF’s mandate should be changed again so it favors domestic rather than overseas securities. GPIF’s officials pushed back, saying they are responsible to pension beneficiaries, not broader policy goals.
Still, Hayes believes that if Tokyo chooses to replay the 2012–2014 script, GPIF could eventually be made to sell hundreds of billions of dollars of foreign assets over several years, a process that would support the yen. But he says this route creates a problem for Washington. Japan Inc. is a major holder of U.S. Treasuries, and turning it from a buyer into a seller would pressure both U.S. bonds and equities. Because U.S. security guarantees underpin Japan’s strategic position, Hayes says this option is politically difficult for both sides.
Option three: repo Treasuries to the Fed through FIMA
This is the path Hayes thinks officials actually want.
He says Japan should not sell Treasuries to raise dollars for yen support. Instead, the Ministry of Finance could repo those Treasuries through FIMA, take the dollars it receives, sell them in the FX market to buy yen, then repatriate the yen and put it to work in Japanese government bonds and equities.
Hayes breaks the sequence into three steps:
- The Ministry of Finance repos a U.S. Treasury position through the Fed’s FIMA facility and receives a dollar loan.
- The ministry sells those dollars and buys yen in the foreign-exchange market.
- The yen returns to Japan and is reinvested into JGBs and stocks.
He says the implications are straightforward. The Fed would create the dollars used in the FIMA lending, so its balance sheet would expand as outstanding transactions rise. USD/JPY would move lower, meaning a stronger yen. Japanese bond yields would decline if local bonds are purchased, and Japanese equities would gain if some of the funds are directed there.
Hayes also argues that the ultimate risk sits with the U.S. taxpayer because Japan, for political reasons, would never really be pressed to repay in a way that compromises its strategic role in Asia. In his framing, that makes the operation functionally equivalent to money printing, with consequences for financial and commodity inflation.
He says yen shorts would also be forced to cover once the direction becomes clear. Even so, he suggests that if the process is engineered through a lower-volatility channel, carry trades could unwind over a longer period rather than through a single violent break.
The bottleneck: FIMA’s current cap
Hayes says the reason this has not already happened at scale is simple. Under current rules, the FIMA facility caps outstanding loans at $60 billion per counterparty.
He writes that the most recent U.S.-Japan FX intervention used more than $100 billion and only lifted the yen about 5%, with the effect fading after a few trading days. If officials want FIMA to become a real support mechanism, he says, the cap would need to be scrapped and the list of eligible counterparties expanded to include large Japanese corporates and quasi-public investment vehicles such as GPIF.
Hayes then turns to Fed governance. He says that during the pandemic, the Federal Open Market Committee delegated authority over changes to FIMA rules to an “FX subcommittee.” He identifies the voting members as Warsh, Williams and Jefferson, and says the group can meet at any time without publishing minutes or vote records, leaving the market with only the final decision.
He says he does not know when Warsh might call the committee and change the rules, but he is not willing to bet that it will not happen. In Hayes’ reading, Bessent has already made the route clear in public, and Donald Trump would back that approach.
Hayes’ size estimate: $1.373 trillion in Treasuries
To gauge how much liquidity this channel could unlock, Hayes narrows the discussion to Treasury collateral, since U.S. Treasuries are the assets currently eligible for FIMA.
His estimates are:
- Japanese government Treasury holdings: $1.143 trillion
- GPIF Treasury holdings: $230 billion
- Total: $1.373 trillion
He compares that figure with roughly $4 trillion in money creation during the pandemic, which drove a major expansion in the Fed’s balance sheet from 2020 through the end of 2021.
Hayes says the relationship between Fed balance-sheet growth and Bitcoin’s price is visually and historically strong. He also argues that AI infrastructure spending is entering what he calls a “capital waste” stage, making Bitcoin and gold more likely destinations for fresh dollar liquidity than companies such as OpenAI or data-center buildouts associated with Elon Musk.
Where he sees upside in crypto: Bitcoin first, then Ether and ENA
Hayes says Maelstrom is already heavily long Bitcoin, so his next question is which assets can move fastest if liquidity loosens again.
His first pick is Ether. He says Ethereum’s case rests on two points: it is one of the few major altcoins that did not make a new all-time high in 2025, and it may become the settlement layer for real-world assets, or RWA.
He then highlights Ethena’s ENA token as a depressed altcoin that could rebound 5x to 10x if conditions turn more favorable. Hayes says ENA’s main weakness is the lack of buybacks, but he is willing to look past that because USDe remains the sixth-largest stablecoin by circulating dollar value.
He also explains why Ethena has struggled. As token prices fell, Bitcoin basis yields compressed, and the yield on holding USDe ended up only slightly above Treasury yields. In his view, that was not enough compensation for centralized-exchange counterparty risk and smart-contract risk. He says USDe circulation has fallen 75% from its peak and ENA is down more than 90%.
Even so, Hayes argues that a moderate increase in dollar liquidity and a Bitcoin rally would lift basis yields again and bring renewed inflows into USDe. It would not take much, he says, for ENA to recover from depressed levels, which is why he sees it as a smaller, high-upside bet over the next few months.
Still waiting for the rule change
Despite the bullish positioning, Hayes says he has not yet pushed his dollar balances to the minimum because he is still waiting for Warsh to convene the relevant committee and change the FIMA rules.
He expects gold and USD/JPY to start moving before any formal announcement because, in his view, heavily positioned investors close to the Trump administration could act early. Until then, he says he will continue to hold and add to the assets that best reflect renewed Fed balance-sheet expansion: Bitcoin, physical gold and gold miners.
His bottom line is blunt. The era of cheap yen is over.