Tokyo-based Metaplanet, a venture capital firm previously focused on Web3, has its sights set on the leading cryptocurrency. The Japanese company made a bold move on Monday by adopting Bitcoin (BTC) as a strategic reserve asset. The decision comes amid growing concerns about Japan’s rising national debt and a weakening yen. Here are the details…
Metaplanet supports leading cryptocurrency
Tokyo-based venture capital firm Metaplanet has taken a bold step by adopting Bitcoin (BTC) as a strategic reserve asset in the face of Japan’s rising national debt and weakening yen. Metaplanet CEO Aiko Tanaka said in a press release:
Unprecedented economic pressures in Japan, particularly the staggering debt-to-GDP ratio and persistently low interest rates, have led us to seek alternative ways to protect our assets. With its limited supply and decentralized structure, Bitcoin provides a compelling hedge against the potential devaluation of traditional fiat currencies.
Debt/GDP ratio is very high in Japan
Japan has the dubious distinction of having the highest debt-to-GDP ratio among developed countries, exceeding a staggering 254% according to the International Monetary Fund (IMF). This enormous debt burden restricts the Bank of Japan (BOJ), along with the US Federal Reserve and other central banks, from raising interest rates. The resulting interest rate differential greatly affects exchange rates, contributing to the sharp depreciation of the yen. Tanaka said:
The BOJ’s strategy of maintaining ultra-low interest rates while intervening in the foreign exchange market to support new markets seems like an unsustainable paradox. We believe Bitcoin offers a more reliable, long-term store of value and potentially appreciates against fiat currencies in the face of potential monetary instability.
Similar to Microstrategy move
Metaplanet’s decision, cryptokoin.com It reflects the strategy used by US-based MicroStrategy, which has aggressively accumulated billions of dollars worth of Bitcoin, as we have reported. This move points to a growing trend of companies taking refuge in crypto assets to navigate the complexities of the current global economic environment. Metaplanet’s initial investment includes 117.7 BTC, worth approximately $7.19 million. They plan to hold this asset for the long term, minimizing taxable gains, and further expand their Bitcoin holdings by issuing long-term debt denominated in yen when market conditions are right.
Metaplanet’s bold move is likely to trigger a heated debate in Japan’s financial sector. While some may view this as a risky gamble, others may view it as a prudent measure to mitigate the risks associated with Japan’s precarious financial situation. The success of Metaplanet’s strategy will depend on Bitcoin’s future price performance and the effectiveness of the BOJ’s ongoing efforts to manage the value of the yen.
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