New Hampshire has approved a municipal bond backed by Bitcoin. The measure aims to connect digital assets with public financing without compromising state funds.
The state's Business Finance Authority (BFA) approved a municipal conduit bond backed by Bitcoin worth $100 millionThis is the first of its kind in the United States, and its structure seeks to channel capital towards economic development without compromising public resources or assuming fiscal risks.
The operation, announced by journalist Eleanor Terrett, host of Crypto in America, is part of a broader strategy by the state to integrate digital assets into its financial policy. In May, New Hampshire had already authorized to its treasury to invest up to 5% of its funds in cryptocurrencies, becoming the first state in the country to establish a strategic Bitcoin reserve.
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The bond approved by the state of New Hampshire, valued at $100 million, is not directly backed by the state or taxpayers. Instead, the Business Finance Authority acts as an intermediary, overseeing and approving the issuance without assuming the risk of default. The guarantee backing the bond is Bitcoin.It is held in custody by a regulated entity and is overcollateralized, meaning that borrowers must deposit more than the loan value in BTC to access the funds.
The structure was designed by Wave Digital Assets, in collaboration with Rosemawr Management, a specialist in municipal bonds. The objective is Connecting the traditional debt market with the crypto ecosystemUnder a regulated framework compatible with institutional norms. According to Les Borsai, co-founder of Wave, this model seeks to demonstrate that digital assets can be securely and scalably integrated into traditional finance.
For the state, this bond functions as a regulated laboratory where companies can obtain loans using Bitcoin as collateral without having to sell their digital assets or incur tax implications per event. If the price of Bitcoin falls below a defined threshold, an automatic liquidation mechanism is triggered to protect bondholders. This overcollateralization logic is common in the DeFi world, but its application to a municipal bond represents a significant innovationwhich could open new avenues for the institutional adoption of cryptocurrencies within conventional regulatory frameworks.
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The Bitcoin-backed bond approved in New Hampshire not only represents a financial innovation, but also a test of maturity for the crypto ecosystem Overall, unlike the crypto-backed loan models that have proliferated on decentralized platforms or exchanges, this initiative operates within a regulated framework, with state oversight and the participation of institutional actors. The bond structure adheres to the standards of traditional debt markets, allowing for its integration without disrupting the existing rules.
Experts have emphasized that this regulated approach allows issuers and borrowers using Bitcoin as a productive asset without needing to liquidate it, thus avoiding immediate tax consequences.
Furthermore, by demanding a overcollateralization of 160% By establishing automatic liquidation mechanisms if the value of BTC falls below 130%, a layer of protection is introduced that mitigates the volatility inherent in crypto assets. In other words, this architecture not only protects investors but also offers a way for digital capital to be mobilized towards productive purposes, such as the financing of innovation and entrepreneurship projects.
Finally, the participation of specialized firms in this project reinforces the legitimacy of the model. Taken together, these elements make the bond a case study on how digital assets can operate within the rules of the traditional financial system.
According to publicationIf the pilot program in New Hampshire proves to be functional and safe, it could set a precedent for other states—and even national governments—to explore similar mechanisms, expanding the institutional reach of cryptocurrencies beyond speculative niches.
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The Bitcoin-backed bond approved in New Hampshire doesn't represent an immediate transformation of the financial system, but it does signal a clear shift towards openness. By allowing cryptocurrencies to serve as collateral for public debt instruments, the state is exploring new ways to connect technological innovation with economic financing needs.
These types of initiatives could contribute to legitimize the use of digital assets in institutional contexts, provided a prudent and regulated approach is maintained. New Hampshire's experience will be closely watched by other states, regulators, and investors seeking to understand how cryptocurrencies can be integrated into the financial system without compromising its stability.
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