New Hampshire unveils first US municipal bond backed by Bitcoin
New Hampshire has taken a historic step in public finance, becoming the first state in the United States to approve a municipal bond backed by Bitcoin. The $100 million issuance marks a significant crossover between traditional fixed-income markets and digital assets, potentially setting a template for how governments and institutions could tap crypto without selling it.
The deal was authorized on November 17 by the state’s Business Finance Authority (BFA), which greenlit what it describes as a “first-of-its-kind $100 million Bitcoin-backed conduit bond.” Unlike conventional municipal bonds, which are typically secured by a government’s taxing power or by income from specific infrastructure projects, this instrument is supported by an over‑collateralized pool of Bitcoin.
How the Bitcoin-backed bond is structured
Under the proposed structure, the company borrowing through this bond must post Bitcoin worth roughly 160% of the bond’s face value as collateral. This over‑collateralization is designed to account for Bitcoin’s well‑known price volatility and to create a substantial buffer for bond investors.
If the market value of the posted Bitcoin were to fall and the collateral ratio slipped to around 130%, a pre‑defined liquidation mechanism would be triggered. In that scenario, a portion of the collateral could be sold to restore coverage and protect bondholders, ensuring they remain whole even in the event of a sharp downturn in the Bitcoin market. This automatic risk‑management feature is central to making the product palatable to conservative fixed-income investors.
To safeguard the Bitcoin pledged as collateral, the state selected BitGo as an independent, third‑party custodian. BitGo will be responsible for holding and securing the digital assets, while the BFA will serve strictly as a facilitator and overseer of the transaction. Importantly, the BFA does not assume any repayment risk; its role is to approve, supervise, and structure the deal, rather than to guarantee it.
Unlocking capital without selling Bitcoin
State Representative Keith Ammon, a Republican who previously spearheaded New Hampshire’s Strategic Bitcoin Reserve legislation, emphasized that this structure lets businesses raise financing without liquidating their Bitcoin holdings. In practice, it functions similarly to borrowing against a portfolio of securities, but in this case the asset is Bitcoin instead of stocks or bonds.
For corporate borrowers with significant Bitcoin treasuries, selling those holdings can trigger taxable events and potentially sacrifice long‑term upside. By borrowing against Bitcoin instead, companies can maintain exposure to the asset while still accessing the capital they need for expansion, operations, or new projects. That combination of liquidity and continued ownership is one of the primary attractions of Bitcoin‑backed credit products.
Where the fees and upside will flow
The transaction is also designed to benefit the state’s broader economy. Fees earned from arranging and managing the bond, alongside any appreciation in the over‑collateralized Bitcoin that is not needed for bondholder protection, will be channeled into the Bitcoin Economic Development Fund.
This dedicated fund is intended to support innovation, entrepreneurship, and business development throughout New Hampshire. In effect, the state is not just experimenting with new financial engineering; it is attempting to turn that experiment into a long‑term catalyst for its tech and startup ecosystem. The more successful and scalable the model becomes, the more potential resources could flow into this development pool.
Private partners behind the deal
The initiative is being led by crypto asset manager Wave Digital Assets in partnership with municipal bond specialist Rosemawr Management. Together, they aim to build a bridge between the $140 trillion global bond market and the rapidly evolving digital asset sector.
Les Borsai, co‑founder of Wave, described the objective as creating a structure that is “fully institutional, fully compliant, and globally scalable.” In other words, this is not intended to be a niche or one‑off experiment. Supporters hope it can demonstrate that Bitcoin and other digital assets can integrate cleanly into the heavily regulated world of debt capital markets, meeting the expectations of institutional investors, rating agencies, and regulators.
Borsai framed the bond not merely as a single transaction but as the opening chapter of a new type of debt market. The aim is to prove that public entities and private firms can collaborate to responsibly harness digital asset reserves, rather than viewing them as speculative side bets disconnected from mainstream finance.
A test case for integrating crypto and bonds
The stakes extend beyond New Hampshire. With the U.S. bond market alone estimated at more than $58 trillion, even a small shift toward Bitcoin‑backed or tokenized debt instruments could represent a massive new use case for digital assets. For now, this bond is a proof of concept: if it performs smoothly, it may encourage other states, municipalities, and even sovereign governments to explore similar structures.
Institutional investors, for their part, are watching closely. Many pension funds, insurance companies, and endowments are restricted by mandate from holding volatile assets like Bitcoin directly, but they can buy fixed‑income securities with robust collateral. A well‑designed Bitcoin‑backed bond could offer them indirect exposure while remaining within compliance frameworks and risk‑management standards.
However, the project will also test how rating agencies and regulators evaluate such instruments. Key questions include how to model Bitcoin’s volatility, how to account for liquidation triggers in stress scenarios, and whether the over‑collateralization buffer is sufficient under extreme market conditions. The outcome of this experiment could shape how similar products are scrutinized in the future.
New Hampshire’s broader Bitcoin strategy
The bond is only one part of a broader digital asset push by New Hampshire. Earlier in 2025, the state became the first in the country to approve a Strategic Bitcoin Reserve, an initiative that allows the treasury to allocate a portion of public funds to select digital assets.
Under the law signed in May by Governor Kelly Ayotte, the treasurer can hold digital assets, but only those that clear strict eligibility thresholds. One key requirement is a market capitalization above $500 billion, a criterion that currently limits the reserve in practice to Bitcoin alone. This approach lets the state participate in the upside of leading digital assets while avoiding the greater risk associated with smaller, less established cryptocurrencies.
Governor Ayotte has framed these moves as both pro‑innovation and fiscally cautious. She has emphasized that the Bitcoin‑backed bond does not put taxpayer money at risk, since the state itself is not pledging its own balance sheet or tax revenues to secure the debt. Instead, the risk is borne by the borrower’s Bitcoin collateral and the mechanics of the bond structure.
Regulatory framework and the Blockchain Basic Laws Act
In parallel with financial experimentation, New Hampshire lawmakers are also working on a regulatory framework designed to attract blockchain businesses while providing legal clarity. The Blockchain Basic Laws Act, which passed the state House shortly after the Bitcoin reserve approval, sets out protections for core participants in decentralized networks.
The bill seeks to safeguard miners, node operators, developers, and self‑custody users, limiting their liability when they are merely providing infrastructure or tools rather than directly controlling user assets. Another key element is the proposal to create a specialized blockchain dispute docket in the superior court. This dedicated track for cases involving digital assets and blockchain technology is intended to build judicial expertise and speed up resolution of complex technical disputes.
Together, these regulatory and financial initiatives signal that New Hampshire is positioning itself as a hub for crypto‑native and Web3 companies that require both capital access and legal predictability.
Why this bond matters for public finance
From a public‑finance perspective, New Hampshire’s move is notable for several reasons:
1. Diversification of collateral types: Traditional munis rely on taxes or project revenues. Using Bitcoin as collateral introduces a new asset class into government‑linked debt without changing who ultimately repays the bond.
2. Innovation without direct fiscal exposure: Because the BFA does not guarantee repayment, the state can test a novel structure without exposing taxpayers to the core economic risks of Bitcoin price swings.
3. Signaling effect: By formally recognizing Bitcoin as suitable collateral in a regulated, institutional product, New Hampshire sends a signal that digital assets can be integrated into mainstream financial infrastructure, not just speculative markets.
4. Competitive positioning: States increasingly compete to attract high‑growth industries. Early adoption of crypto‑friendly laws and instruments may help New Hampshire lure fintech startups, digital asset firms, and blockchain developers who see regulatory clarity as a competitive advantage.
Potential risks and challenges
Despite the enthusiasm, the structure is not without risk. Bitcoin’s volatility remains the central challenge. Even with 160% initial collateralization and a 130% liquidation trigger, extreme price crashes could stress the system—especially if liquidations must occur in a falling market where liquidity is strained.
Operational and custodial security are equally critical. The entire structure depends on the integrity of the custodian, the robustness of its security practices, and the reliability of smart contracts or other technical tools governing liquidation and monitoring.
Another open question is market appetite. While the deal has institutional structuring and compliance in mind, investors will ultimately decide what yield premium, if any, they demand for exposure to a Bitcoin‑backed municipal bond compared with traditional credits. Early deals may need to offer slightly higher returns to compensate for novelty and perceived complexity.
Regulatory attitudes could also shift. Although the structure is designed to comply with existing rules, evolving federal guidance on digital assets, custody, and capital treatment could affect demand, collateral rules, or reporting obligations in future issuances.
What this could mean for other states
If New Hampshire’s bond performs well—meeting its payment schedule, managing collateral smoothly, and avoiding major volatility‑induced disruptions—it may encourage policymakers elsewhere to consider similar experiments. States with active tech sectors or ambitions to become fintech hubs could be especially interested.
Future variations might include:
– Bonds backed by baskets of digital assets meeting strict criteria
– Tokenized versions of traditional municipal bonds, enabling on‑chain trading and settlement
– Public‑private partnerships where infrastructure revenues and digital asset reserves jointly collateralize debt
Conversely, if the structure encounters serious issues, it may slow the adoption of crypto‑backed instruments in the public sector, at least until new safeguards or design changes are proven.
A turning point for the relationship between crypto and the state
New Hampshire’s Bitcoin‑backed municipal bond and its Strategic Bitcoin Reserve represent more than isolated policy moves. They mark an evolution in how governments interact with digital assets—shifting from mere regulation and enforcement toward active participation and integration.
Whether this experiment becomes a model for others or remains a unique case will depend on execution, market reception, and the broader trajectory of the crypto market. For now, New Hampshire has claimed a new “first in the nation” title: the first U.S. state to put Bitcoin at the core of a municipal bond, testing how far the boundaries between traditional public finance and the digital asset economy can be pushed.