New Hampshire Issues $100M Bitcoin-Backed Municipal Bond
New Hampshire has taken a significant and pioneering step in the world of finance by approving the issuance of a $100 million municipal bond secured by Bitcoin, marking what appears to be the first of its kind at the state level. This innovative structure, authorized through the New Hampshire Business Finance Authority (BFA), demonstrates a willingness to explore the potential of digital assets within the traditional bond market. The move represents a bold experiment in financial engineering, leveraging the volatility of Bitcoin as collateral to attract investors and generate revenue for local economic development initiatives.
The decision, formalized during a meeting on November 17th, involved the approval of a preliminary intent to issue a taxable conduit revenue bond for WaveRose Depositor, LLC, authorizing a bond up to $100,000,000. Minutes from the subsequent day confirmed the board’s vote, solidifying the agreement. This bond isn’t backed by the state government itself; instead, the BFA acts as an overseer of a private deal. At the heart of the arrangement is Bitcoin, currently held in custody by BitGo, functioning as the underlying collateral. The structure mirrors that of conventional municipal and corporate bonds, offering investors a familiar framework for risk assessment and return expectations.
The primary architect of this arrangement is Wave Digital Assets, alongside bond specialist Rosemawr Management. Their vision is to “bridge traditional fixed income with digital assets,” catering to the growing demand from institutional investors seeking exposure to the burgeoning cryptocurrency market. Les Borsai, a co-founder of Wave Digital Assets, emphasized the potential for this structure to unlock the value of digital asset reserves responsibly. The bond requires the borrower to post approximately 160% of the bond’s value in Bitcoin as collateral, a significant over-collateralization designed to mitigate risk. Crucially, if the price of Bitcoin declines below approximately 130%, a liquidation process would ensure that bondholders are fully compensated, maintaining the integrity of the investment.
James Key-Wallace, Executive Director of the BFA, clarified that the fees generated from the transaction would directly fund the local innovation and entrepreneurship program and the Bitcoin Economic Development Fund. This symbiotic relationship between financial innovation and local economic support underscores the strategic intent of the arrangement. The BFA’s role is not simply to facilitate a financial transaction but to actively contribute to the growth and development of the New Hampshire economy, positioning the state as a forward-thinking center for digital asset exploration.
This ambitious move aligns with New Hampshire’s pre-existing efforts to embrace the cryptocurrency industry. As early as 2015, the state was already considering a bill that would have allowed the government to accept tax and fee payments in Bitcoin. While this specific bill failed to pass in 2016, it demonstrated an early recognition of Bitcoin’s potential and New Hampshire’s willingness to be a leader in this emerging asset class. Moreover, as far back as 2016, some advocates argued that New Hampshire was arguably one of the world’s most Bitcoin-friendly communities, signaling a long-standing commitment to supporting blockchain technology.
The state’s current trajectory expands on this history, revealing a persistent interest in leveraging Bitcoin’s unique properties. Currently, New Hampshire is also engaged in a bill to deregulate local cryptocurrency mining operations, a measure that recently passed a committee vote of 4-2 to send for further review in an interim study after it had been deadlocked in the State Senate twice. This proactive approach demonstrates a sustained commitment to innovation within the sector, and positions New Hampshire as a welcoming environment for the cryptocurrency industry. The state is viewed as an attractive location for cryptocurrency companies, particularly following the trend of businesses relocating to countries like the Bahamas.
New Hampshire’s forward-thinking stance is attracting attention within the broader context of the cryptocurrency landscape. For example, in early February, Brendan Cochrane, an Anti-Money Laundering specialist at YK Law in New York City, argued that the state could become an alternative for crypto companies relocating to the Bahamas. This highlights the potential for New Hampshire to become a hub for cryptocurrency businesses seeking a more stable and supportive regulatory environment. This latest venture builds on a longer history of crypto engagement, showcasing an ongoing commitment to exploring opportunities within the digital asset space.
