• New Hampshire approves first-ever $100M Bitcoin-backed municipal conduit bond.
• Borrowers use overcollateralized BTC for funding while taxpayers remain risk-free.
• The move strengthens New Hampshire’s growing status as a leading crypto-friendly state.

New Hampshire has approved a $100 million municipal conduit bond backed by Bitcoin, marking what appears to be the first structure of its kind at the U.S. state level. The move allows borrowers to raise capital by using overcollateralized Bitcoin as security while keeping taxpayers and state funds fully protected from risk. The decision also strengthens New Hampshire’s position as a leading crypto-friendly jurisdiction.

Minutes from the Nov. 17 meeting of the New Hampshire Business Finance Authority (BFA) show the board planned to consider a resolution authorizing “up to $100,000,000 in bonds for a project to acquire and hold digital currency.”

According to the minutes of the next day, the directors decided to give unanimous approval to the preliminary official intent to issue a taxable conduit revenue bond for WaveRose Depositor, LLC. The position of the BFA is supervisory, as it does not guarantee or provide financial assistance for the bond.

Private Custody Secures the BTC-Backed Bond

In a Wednesday report, Crypto in America reported that the bond is secured by the Bitcoin of a private custodian. The investors will raise capital in the form of overcollateralized BTC borrowing, enabling investors to trust investments based on digital assets, as opposed to state guarantees. The structure keeps the volatile off of the public funds and provides companies with a new form of raising funds.

The bond structure is developed by Wave Digital Assets and municipal bond investment manager Rosemawr management. Both companies shaped the construction according to the current regulations of municipal and corporate bonds. 

Source: Wikimedia

Les Borsai, the co-founder of Wave, clarified that the goal is to establish a connection between traditional fixed-income markets and digital assets. He claimed that the structure illustrates how the public and private sectors can work together to introduce value on digital asset reserves in a controlled action.

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In the terms, the borrower is expected to put the bond with approximately 160% in Bitcoin. In case the price of Bitcoin was low and the collateral was approximately 130%, the custodian will liquidate the collateral. This guarantees to the bondholders that the collateral is retained and that the value does not go below the owed value. 

New Hampshire Deepens Its Longstanding Crypto Commitment

BFA Executive Director James Key-Wallace indicated that the transaction will raise fees that will serve the Bitcoin Economic Development Fund, which focuses on enhancing innovation and entrepreneurship in New Hampshire.

The decision comes after a series of new crypto-related measures by the state. In May, New Hampshire was the first state in the United States to allow its local government units to invest in cryptocurrencies and precious metals when Governor Kelly Ayotte signed a bill revising municipal investment regulations. 

Legislators are currently reviewing another bill that aims to relax regulations on domestic cryptocurrency mining. This proposal had cleared the State Senate twice but was sent back to be reconsidered in late October following a 4-2 decision of the committee.

The recent action taken by New Hampshire to move on is part of a long history of crypto activity. The state contemplated accepting Bitcoin for paying taxes and fees in 2015, but the bill was unsuccessful later in 2016. Nonetheless, New Hampshire has long been considered as one of the most Bitcoin-friendly states in the world, and the new bond approved strengthens that image.

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