New Hampshire Approves Bitcoin-Backed Municipal Bond

Bitcoin (BTC) is on the verge of a historic milestone. New Hampshire has taken a significant step by approving the first municipality bond backed by Bitcoin in the United States, opening an important gateway for digital assets into the global debt market. This development is being closely monitored by investors.

The New Hampshire State Business Finance Authority (BFA) has approved a total of $100 million in Bitcoin-backed conduit bonds, implementing a revolutionary model in traditional fixed-income markets. In this process, the state's budget and taxpayers bear no risk; the BFA merely acts as an intermediary that approves and oversees the structure. The safety of investors is ensured with over-collateralized Bitcoin held by BitGo.

This historic step came after New Hampshire passed a law allowing its public treasury to invest in digital assets. Governor Kelly Ayotte described this development as an "innovative financial opening," stating that they aim to strengthen the state’s leadership claim in the digital finance realm.

Looking at the operation of the Bitcoin-backed bond, it is designed as a product compatible with traditional bond rules by Crypto asset manager Wave Digital Assets and municipal bond expert Rosemawr. The borrowing party deposits Bitcoin collateral worth approximately 160% of the bond value. If the collateral level falls below 130%, automatic liquidation is triggered to protect investors. This model allows companies wanting to borrow to create capital without selling Bitcoin. State Representative Keith Ammon emphasized that this bond serves as a "sandbox testing how Bitcoin can function as high-quality collateral in public financing." Possible gains and transaction fees will be transferred to the state's Bitcoin Economic Development Fund.

The significance of New Hampshire’s move lies not only in creating a product but also in its potential to integrate Bitcoin into a global debt market that is approximately $140 trillion in size. If this model proves successful, it could inspire other states and countries. Wave co-founder Les Borsai noted that this setup will "open the way for Bitcoin to securely integrate with traditional finance and become an active economic tool." As institutional interest grows, more Bitcoin-backed bonds, credit products, and derivative structures are expected to emerge.

In conclusion, New Hampshire's strategic move demonstrates that digital assets are moving beyond being merely a traded investment vehicle to taking a more active role in the real economy and public financing. For investors, monitoring these new applications of Bitcoin is of great importance.