New Hampshire is taking a historic step: the state is introducing the first US bond fully backed by Bitcoin. The experiment marks a new chapter in the entanglement between crypto and traditional state finance, without putting taxpayers at risk.
New Hampshire links bonds to Bitcoin
New Hampshire makes history by becoming the first US state to authorize a $100 million municipal bond fully backed by Bitcoin (BTC). The news appears from an internal meeting report of the state of New Hampshire.
This model differs from traditional bonds because the state and taxpayers do not act as guarantors. Instead, the loan is backed by Bitcoin reserves that amount to about 160 percent of its value. If the value of Bitcoin drops to around 130 percent, the crypto will be automatically sold. This way, investors are better protected against losses.
Bitcoin is reportedly managed by BitGo, a well-known player in the crypto custody world. The structure of the bond was designed by Wave Digital Assets, in collaboration with Rosemawr Management, an established party in municipal finance.
Innovative model that fits a crypto-friendly course
The idea behind this new bond is that the state no longer wants to be solely dependent on traditional government bonds or tax revenues. Issuing a bond backed by Bitcoin reserves creates an additional financing channel. The proceeds can then be used for the Bitcoin Economic Development Fund, which stimulates innovation and technological development in the field of BTC in the region.
New Hampshire has long been positioning itself as a crypto-friendly state. In May, it became the first US state to officially add Bitcoin to its state reserve. A new law allows the state to invest up to five percent of its reserves in Bitcoin and other cryptocurrencies with a market capitalization of more than $500 billion (currently this only applies to BTC).
Since Trump became president again, the pro-crypto trend in the United States has noticeably strengthened. More and more American states are following the national example by creating their own Bitcoin reserves. In addition to New Hampshire, Texas and Arizona are also leading the way, each with their own approach. Meanwhile, the national Bitcoin reserve amounts to 326,588 BTC, worth more than 29 billion dollars at the current rate. This means that the United States has the largest government reserve of the digital currency in the world.
Source: https://newsbit.nl/primeur-in-de-vs-staat-new-hampshire-koppelt-obligatie-aan-bitcoin-reserve/
