New Hampshire has approved the issuance of a $100 million municipal bond backed by Bitcoin, marking what appears to be the first structure of its kind at the U.S. state level. Minutes from a November 17 meeting of the New Hampshire Business Finance Authority (BFA), the state’s business financing agency, indicate the board planned to "consider approving a resolution authorizing up to $100,000,000 bonds for a project to acquire and hold digital currency."
Minutes from the following day record that directors voted to "approve the preliminary official intent, with no reservation, to issue a taxable conduit revenue bond for WaveRose Depositor, LLC of up to $100,000,000."
According to a report, the bond is backed by Bitcoin (BTC) and would allow companies to borrow against overcollateralized BTC held by a private custodian. The state or taxpayers do not back the bond; instead, the BFA approves and oversees a private deal, while Bitcoin, reportedly held in custody by BitGo, covers investors.
Asset manager Wave Digital Assets and bond specialist Rosemawr Management designed the bond to utilize Bitcoin as collateral under the same rules that govern municipal and corporate bonds. Wave co-founder Les Borsai stated the goal is to "bridge traditional fixed income with digital assets" for institutional investors.
"We believe this structure shows how public and private sectors can collaborate to responsibly unlock the value of digital assets and digital asset reserves," Borsai added.
The borrower is expected to post approximately 160% of the bond's value in Bitcoin as collateral. If the price of BTC drops below roughly 130%, a liquidation would occur to ensure bondholders remain whole. According to BFA Executive Director James Key-Wallace, fees from the transaction will fund the local innovation and entrepreneurship program, the Bitcoin Economic Development Fund.
New Hampshire's Growing Engagement with Cryptocurrency
This development follows New Hampshire becoming the first U.S. state to allow its government to invest in cryptocurrencies in May. This occurred after Governor Kelly Ayotte signed a bill permitting the municipality to "invest in cryptocurrency and precious metals."
New Hampshire is also advancing a bill to deregulate local cryptocurrency mining operations. In late October, a committee voted 4–2 to send the measure for further review in an interim study after it had been deadlocked in the State Senate twice.
The local administration is recognized for its welcoming stance toward the cryptocurrency industry. In early February, Brendan Cochrane, an Anti-Money Laundering specialist at YK Law in New York City, suggested that New Hampshire could become an alternative for crypto companies looking to relocate from places like the Bahamas.
These recent actions build upon a longer history of crypto engagement in the state. As early as 2015, New Hampshire was working on a bill that would have enabled the state government to accept tax and fee payments in Bitcoin. Although the bill ultimately failed in 2016, it demonstrated the local administration's early interest in this asset class. Furthermore, by 2016, some advocates were already asserting that New Hampshire was among the world's most Bitcoin-friendly communities.