New Hampshire has approved a first-of-its-kind $100 million municipal bond backed by Bitcoin, marking a significant step in integrating digital assets with traditional finance in the United States. The New Hampshire Business Finance Authority (BFA) approved the bond, allowing companies to borrow money using Bitcoin as collateral instead of traditional assets like buildings or land. This move follows the state's earlier decision to allow up to 5% of its treasury to be invested in digital assets.

The structure of the bond requires borrowers to post approximately 160% of the bond's value in Bitcoin, which is held in custody by BitGo. To protect investors, an automatic liquidation system activates if Bitcoin's value drops to near 130% of the bond's value. This mechanism ensures that bondholders are protected from significant market fluctuations.

The bond was designed through a partnership between Wave Digital Assets and Rosemawr Management, with legal structuring support from the Orrick law firm. Their aim was to create a compliant and scalable bridge between digital assets and traditional bond markets, adhering to the legal and regulatory standards that govern government and corporate debt. Les Borsai, co-founder of Wave Digital Assets, stated that the goal is to build an institutional, compliant, and globally scalable structure.

Governor Kelly Ayotte has hailed the bond's approval as a major milestone, positioning New Hampshire as a leader in digital finance without risking public funds. The state's BFA acts as a conduit, overseeing the deal while ensuring investor protection through the Bitcoin collateral.

The fees and gains generated from the Bitcoin collateral will be channeled into the state's Bitcoin Economic Development Fund. This fund is designed to support innovation, startups, and new business activity within New Hampshire, leveraging digital assets for economic growth.

This initiative could set a precedent for other states to follow, potentially opening the door for Bitcoin and other digital assets to enter the $140 trillion global debt market. New Hampshire's move is part of a broader trend, with states like Texas and Ohio also exploring Bitcoin-focused legislation. Texas, for example, has created the Texas Strategic Bitcoin Reserve, becoming the first state to hold Bitcoin using public funds. The municipal bond leverages New Hampshire's strategic Bitcoin reserve to secure funding for infrastructure and public projects.