New Hampshire Launches First US Bitcoin Municipal Bond

The US State of New Hampshire has issued a first-of-its-kind $100 million Bitcoin-backed municipal bond, allowing companies within the state to borrow against over-collateralized Bitcoin held by a private custodian. The Business Finance Authority (BFA) approved the bond on November 17, despite Bitcoin’s recent price correction from its all-time high.

The bond is not backed by the state or taxpayers. Instead, the BFA acts as a conduit, overseeing the transaction without assuming repayment risk. BitGo will serve as the Bitcoin custodian, providing investor protection. Governor Kelly Ayotte, who signed the Strategic Bitcoin Reserve bill into law in May, believes this could attract new investment opportunities without risking funds.

Wave Digital Assets structured the bond in partnership with Rosemawr Management, aiming to connect digital assets with the traditional debt market, utilizing Bitcoin as collateral according to established municipal and corporate bond regulations. Les Borsai, co-founder of Wave, stated their goal is to “bridge traditional fixed income with digital assets in a way that’s fully institutional, fully compliant, and globally scalable.”

Borrowers must post approximately 160% of the bond’s value in Bitcoin as collateral. An automated liquidation mechanism is triggered if collateral falls below about 130%, protecting bondholders. This structure allows borrowers to access capital without selling Bitcoin or triggering a taxable event.

Fees from the transaction, along with any appreciation in the Bitcoin collateral, will be directed to the Bitcoin Economic Development Fund, supporting innovation and economic growth within the state. BFA Executive Director James Key-Wallace emphasized this potential for supporting state initiatives.

Crypto-backed borrowing has previously existed in private markets, but New Hampshire’s model marks its debut in US municipal finance. If successful, it could serve as a template for other states. Borsai believes this could open a new debt market accessible to digital assets.

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Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility.