New Hampshire’s plan to establish a Bitcoin-backed $100 million municipal bond, which Governor Kelly Ayotte has called “historic,” will be presented this week to the state’s five-member Executive Council for final approval.
What the plan involves
James Key-Wallace, executive director of the New Hampshire Business Finance Authority, asked the governor and council to hold a public hearing, determine the proposal is feasible and beneficial, and greenlight the initiative.
The hearing is slated for Wednesday morning.
If approved, the quasi-governmental Business Finance Authority will issue what it describes as a “groundbreaking” municipal bond using a model Key-Wallace said will position New Hampshire as “a global leader in responsible crypto finance.”
Unlike a typical municipal bond, investors would be repaid by a private borrower rather than the government, with bitcoin serving as collateral.
Protecting state funds
The idea is part of a broader effort to attract blockchain innovation to the state without placing public funds at risk.
While bitcoin’s volatility could trigger an automatic liquidation before the three-year term ends, the loan agreement establishes a conduit between private investors and a private borrower, shielding the state financially.
Ayotte said in a statement last fall:
“This is an innovative way to bring more investment opportunities to our state and position us as a leader in digital finance without risking state funds or taxpayer dollars.”
Skeptics weigh in
Moody’s assigned provisional “Ba2” ratings in March, signaling the bonds are “speculative” and carry “substantial” credit risk, placing them in the “junk” category.
David Krause, an emeritus finance professor at Marquette University, found recent bitcoin price swings would be “highly likely” to trigger the plan’s liquidation provision.
He concluded:
“While the bond may serve as a proof of concept for integrating digital assets into structured finance, it is not well suited as a general-purpose public finance tool.”
