New Hampshire is planning to issue the first-ever government bonds backed by Bitcoin, further solidifying the state as a leader in embracing cryptocurrencies.
The move comes six months after Gov. Kelly Ayotte signed a bill that made New Hampshire the first state with the authority to invest in Bitcoin and other digital assets.
On Tuesday, directors of the N.H. Business Finance Authority approved issuing up to $100 million in bonds backed by “digital assets”. If the decision is approved by the governor and executive council, as seems likely, it would be a novel move, since crypto-backed borrowing exists in private markets but not as part of government finance.
The website Crypto in America, one of the first to report on the bond, said it is effectively a test for whether Bitcoin can work as collateral in municipal finance. “If New Hampshire’s model succeeds, it could set a blueprint for other states to follow,” the website said.
Any fees from the transaction will support the new Bitcoin Economic Development Fund, which could be invested in programs that support business in the state.
Under the proposed structure, the borrower will put up Bitcoin worth about 160 percent of the bond. If the price of Bitcoin drops below roughly 130 percent of the bond’s value, some of the cryptocurrency would be sold to reduce the outstanding bond.
The Business Finance Authority said the transaction was conceptualized by Wave Digital Assets, in partnership with Rosemawr Management, an alternative investment manager. BitGo Trust Company, Inc, a digital asset infrastructure company, will serve as custodian for the collateral, “securing it in regulated cold storage with advanced multi-layer security.”
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