New Hampshire is planning to issue the first-ever government bonds backed by Bitcoin, further marking the state as a leader when it comes to embracing cryptocurrencies.
The move comes six months Gov. Ayotte signed a bill that made New Hampshire the first state with the authority to invest in Bitcoin and other digital assets.
In Tuesday, directors of the New Hampshire Business Finance Authority, the state’s business financing agency, approved issuing up to $100 million in bonds backed by “digital assets”. If the decision is approved by the governor and executive council, as seems likely, it would be a first, since crypto-backed borrowing exists in private markets but not as part of government finance.
The website Crypto in America, one of the first to report on the bond, said it is effectively a test for whether Bitcoin can work as collateral in municipal finance. “If New Hampshire’s model succeeds, it could set a blueprint for other states to follow,” the website said.
Any Business Finance Authority fees from the transaction will support the new Bitcoin Economic Development Fund, which could be invested in programs support business in the state.
Under the proposed structure, the borrower will put up Bitcoin worth about 160% of the bond. If the price of Bitcoin drops below roughly 130% of the bond’s value, some of the cryptocurrency would be sold to reduce the outstanding loan amount.
In a press statement, the BFA said the the transaction Lwas conceptualized by Wave Digital Assets, in partnership with Rosemawr Management, an alternative investment manager. BitGo Trust Company, Inc, a digital asset infrastructure company, will serve as custodian for the collateral, “securing it in regulated cold storage with advanced multi-layer security.”
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