Metaplanet, a company listed on Tokyo’s stock market, has decided to use Bitcoin as a safety net against Japan’s money problems. They believe Japan’s debt and the volatility in the yen make bitcoin a good investment.
The company said in a press release, “Metaplanet has adopted bitcoin as its strategic reserve asset. The move is a direct response to sustained economic pressures in Japan, notably high government debt levels, prolonged periods of negative real interest rates, and the consequently weak yen.”
They have bought 117.7 bitcoins (about $7.19 million) since April, following a strategy similar to that of another company, MicroStrategy, which has bought billions of dollars in bitcoin. Metaplanet has stopped investing in Web3 and now focuses only on Bitcoin and real estate.
This is a big deal because Japan is having a financial crisis. The country’s debt compared to its economy is the highest in the world. Japan’s central bank, the Bank of Japan (BOJ), can’t raise interest rates like other big banks, which has hurt the yen’s value.
Japan currently holds the highest debt-to-GDP ratio among advanced nations, standing at over 254%, as tracked by the International Monetary Fund. In comparison, the United States has a debt-to-GDP ratio surpassing 123%.
While the U.S. has raised its interest rates, Japan’s rates stay very low. This has caused the yen to drop a lot against the U.S. dollar, hitting a 34-year low recently. The Japanese yen has depreciated by 50% against the U.S. dollar since early 2021.
The company plans to hold bitcoin for the long term to ensure minimally realized taxable gains and to acquire more bitcoin by issuing long-dated yen liabilities when the opportunity arises.
Metaplanet thinks that as the yen keeps getting weaker, bitcoin is a good choice because it’s not controlled by any country and tends to go up in value against traditional money. They plan to keep their bitcoins for a long time to avoid paying too much tax and to buy more when they can borrow money cheaply.
Also Read: Mark Cuban Urges SEC to Learn from Japan Crypto Regulations
