FIMA Expansion Could Fuel Bitcoin, Ether, and Gold, Says Hayes
Arthur Hayes, co-founder of BitMEX, believes that an expansion of the Federal Reserve's Foreign and International Monetary Authorities Repo Facility (FIMA) could create a liquidity tailwind for Bitcoin, Ether, and gold.
FIMA allows approved foreign central banks and monetary authorities to temporarily exchange Treasuries held at the New York Fed for dollars rather than selling them outright. The current rules limit outstanding transactions to $60 billion per counterparty, but Hayes argues that removing or sharply increasing this ceiling could allow Japan to mount larger yen interventions without dumping Treasuries into the market.
Japan has confirmed its plans to use FIMA after coordinating a yen intervention with Washington on July 31. Finance Minister Satsuki Katayama stated that Japan 'plans to utilize' the Fed facility in the future, leaving the door open for additional joint intervention.
The potential expansion of FIMA could provide a temporary increase in reserve liquidity, which Hayes believes would strengthen the yen and boost prices for scarce monetary assets like Bitcoin. However, it's essential to note that this is a forward-looking thesis built around a policy mechanism that has not yet been expanded publicly by the Fed.