New Hampshire, US, approves first 'Bitcoin-backed municipal bond'…US$100 million

The state of New Hampshire in the United States has approved the issuance of a municipal bond secured by Bitcoin (BTC). As the first case of a digital asset being linked to the traditional bond market, it raises the possibility of opening a new structure for the global debt market, which is as large as US$140 trillion.

According to Crypto in America, a crypto-focused media outlet, New Hampshire's Business Finance Authority (BFA) on the 18th (local time) allowed a US$100 million bond issued by a private company secured by Bitcoin under an 'institutional approval arrangement (conduit structure)'. This structure has the public agency only overseeing, while the repayment responsibility rests entirely with the private borrower. The collateral Bitcoin will be held by custody firm BitGo.

Although the BFA is a public agency, it does not assume repayment obligations for this bond. The agency's role is limited to approving and overseeing the bond structure. The bond is designed to allow a company to raise funds without selling the Bitcoin it holds. The collateral ratio is set at about 160% of the bond amount, and if the Bitcoin price falls and the collateralization drops below 130%, an automatic collateral liquidation mechanism activates to protect investors.

Meanwhile, earlier this year New Hampshire became the first US state to allow digital asset investments within state finances up to 5%. Governor Kelly Ayotte said in a statement, "New Hampshire has once again been the first to embrace a new financial technology," adding, "It is a way to open more investment opportunities without endangering state finances."