Metaplanet, a Tokyo-listed investment firm, has made a major decision to adopt bitcoin as a strategic reserve asset to provide insurance against Japan’s debt burden and the resulting volatility in the yen.

The company’s move comes in response to sustained economic pressures in Japan, including high government debt levels, prolonged periods of negative real interest rates, and a weak yen.

Since April, Metaplanet has acquired 117.7 BTC ($7.19 million), following the strategy of U.S.-listed MicroStrategy (MSTR), which has acquired several billion dollars worth of bitcoin.

Metaplanet, an early-stage investment firm, has shifted its focus exclusively to bitcoin alongside its exposure to commercial real estate, moving away from any involvement in Web 3.

The adoption of bitcoin as a strategic reserve asset by Metaplanet stands out for several reasons. Firstly, it comes at a time when Japan’s fiscal crisis is said to be playing out in the currency market.

Secondly, crypto experts have long suggested that bitcoin is a cushion against fiscal and monetary imprudence. Moreover, the relatively higher debt in Japan has kept the Bank of Japan (BOJ) from raising interest rates in line with other major central banks, including the Federal Reserve (Fed).

Higher interest rates raise the cost of servicing debt, which further complicates the fiscal issues.

According to data tracked by the International Monetary Fund, the ratio between Japan’s gross debt and gross domestic product (GDP) currently exceeds 254%, the highest in the advanced world.

In comparison, the U.S. debt-to-GDP ratio has exceeded 123%. While the Fed has lifted rates above 5% since early 2022, the benchmark borrowing cost in Japan remains near zero.

As such, the yen, one of the top five global reserve currencies, has depreciated sharply, and interest rate differentials heavily impact monetary currency exchange rates.

Data from charting platforms shows that the Japanese yen has depreciated by 50% against the U.S. dollar since early 2021. The yen recently slipped past 155 per U.S. dollar, reaching a 34-year low.

The sell-off reportedly saw BOJ sell dollars to put a limit under the yen in a classic currency market intervention. Metaplanet believes that bitcoin offers a non-sovereign store of value that has, and may continue, to appreciate against traditional fiat currencies as the yen continues to weaken.

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The company added that the BOJ’s strategy of keeping rates low while intervening in the FX markets represents an unsustainable monetary contradiction.

Metaplanet plans to hold bitcoin for the long term to ensure minimally realised taxable gains and to acquire more bitcoin by issuing long-dated yen liabilities when the opportunity arises.

The company’s move is a testament to the growing adoption of cryptocurrency and its potential to serve as insurance against economic uncertainties.