New Hampshire has approved the first-ever $100 million Bitcoin-backed municipal bond in the U.S., allowing companies to borrow against over-collateralized BTC.
By Bhushan Akolkar
Editor Yana Khlebnikova
Updated
2 mins read
The US State of New Hampshire has launched a first-ever $100 million Bitcoin-backed municipal bond. Companies in the state are now able to borrow against over-collateralized BTC held by a private custodian.
The state’s top regulating agency, Business Finance Authority (BFA), gave a go-ahead for the same on November 17. This latest development comes despite the Bitcoin price correcting by 25% from its all-time high.
Although BFA is a state entity, the bond is not backed by the state or taxpayers. Instead, BFA serves as a conduit, approves and oversees the transaction without assuming repayment risk.
Investor protection is provided through Bitcoin held in custody by BitGo. Governor Kelly Ayotte, who signed the Strategic Bitcoin Reserve bill into law in May, welcomed the development. In a word with Crypto America, Ayotte said that it could bring new investment opportunities to the state without risking the funds.
Wave Digital Assets has structured the Bitcoin bond in partnership with municipal bond specialist Rosemawr Management, aiming to connect digital assets with the traditional debt market. The company will use Bitcoin as collateral in accordance with established municipal and corporate bond regulations.
Les Borsai, co-founder of Wave, said: “Our goal is to bridge traditional fixed income with digital assets in a way that’s fully institutional, fully compliant, and globally scalable.”
Under the proposal, the borrower would post approximately 160% of the bond’s value in Bitcoin as collateral. If the collateral falls below about 130%, an automated liquidation mechanism would be triggered to ensure bondholders are fully protected. This model allows borrowers to access capital without selling their Bitcoin or creating a taxable event.
BFA Executive Director James Key-Wallace said that fees from the transaction, along with any appreciation in the Bitcoin collateral, will be directed to the Bitcoin Economic Development Fund. The goal here is to support innovation, entrepreneurship, and economic growth across the state.
Crypto-backed borrowing has been available in private markets for years, but it has never been used in U.S. municipal finance. If New Hampshire’s approach proves successful, it could establish a template for other states to adopt. Borsai said that the end goal is to open a new debt market.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
