New Hampshire has approved a USD 100 million Bitcoin-backed municipal bond, marking the first initiative of its kind in the United States. The issuance allows private companies to borrow using Bitcoin as collateral without putting taxpayers at risk, signaling a milestone moment as Bitcoin officially enters the realm of local public debt with a structure built to appeal to traditional financial markets.

?SCOOP: New Hampshire Launches First Bitcoin-Backed Municipal Bond

The Granite State just became the first to approve a muni bond backed by $BTC, a milestone that could pave the way for digital assets to enter the $140 trillion global debt market.https://t.co/18XTtMK9Tw

— Eleanor Terrett (@EleanorTerrett) November 19, 2025

A First in U.S. Public Finance: Bitcoin Enters the Municipal Bond Market

The bond is issued through the state’s Business Finance Authority (BFA), a public agency that facilitates corporate financing. The BFA acts as a conduit, structuring and supervising the operation without carrying the credit risk on its own balance sheet.

Eligible companies based in New Hampshire can borrow by depositing Bitcoin as collateral, enabling them to raise capital without selling their BTC or triggering immediate tax events. The initiative aims to support productive investment while allowing businesses to leverage what many consider a strategically important Bitcoin reserve.

This move positions Bitcoin not merely as a reserve asset but as high-quality collateral within a municipal debt framework. It sends a strong signal to other U.S. states and to the broader bond market, where regulators and investors are carefully watching the experiment.

How the Bitcoin-Backed Bond Works

To reassure investors, the bond is designed with overcollateralization. Borrowers must deposit approximately 160% of the loan value in Bitcoin. If Bitcoin’s price declines and the collateral ratio approaches 130%, an automatic liquidation mechanism is triggered to sell a portion of the Bitcoin and restore the safety buffer.

The Bitcoin collateral is held by a regulated institutional custodian specializing in digital assets, mirroring the safeguards found in traditional bond markets, which is a clear role separation, controlled risk mechanisms, and predefined liquidation rules.

This structure provides investors with an added layer of protection. Even during periods of high Bitcoin volatility, the overcollateralization and liquidation thresholds help reduce the probability of default. At the same time, companies can maintain long-term Bitcoin exposure, aligned with a “hodler” treasury strategy, while still gaining access to capital.

A critical political point emphasized by the state: taxpayers do not guarantee the debt. The risk rests on the Bitcoin collateral and the borrower, not on the public budget, helping make the initiative more publicly acceptable.

A Core Component of New Hampshire’s Bitcoin Strategy

This municipal bond is part of a larger policy direction. New Hampshire has already adopted rules allowing certain public funds to invest a limited portion of their portfolios in digital assets, particularly Bitcoin. The state is positioning itself as a pioneer in regulated digital finance.

Revenue generated from the bond, including issuance fees and potential gains on Bitcoin collateral, will fund the Bitcoin Economic Development Fund, which supports innovation, job creation, and local entrepreneurship.

In effect, New Hampshire aims to transform Bitcoin from a passive reserve asset into a productive economic lever. If successful, the initiative could become a model for other jurisdictions looking to utilize their Bitcoin reserves without exposing taxpayers to risk.

What This Means for Bitcoin and Global Bond Markets

Symbolically, this bond opens a door in a global bond market valued at more than USD 100 trillion. It demonstrates that Bitcoin can be integrated as structured collateral within regulated debt products and not just speculative reserves or niche crypto-platform collateral.

If Bitcoin becomes widely accepted in municipal bonds, corporate debt, or even sovereign instruments, it would significantly enhance its financial legitimacy. Institutional investors, such as pension funds, insurers, bond funds, could eventually become key participants.

Bitcoin’s volatility makes these structures more complex than traditional Treasury-backed bonds. The liquidation mechanisms must prove their resilience during major market shocks, and future issuances will need to strike a balance between investor protection and borrower flexibility.

Still, New Hampshire’s move is already seen as a real-world test case. If the model works, it could pave the way for other governments to harness Bitcoin reserves within a controlled, taxpayer-safe framework. For the crypto sector, it’s another sign that Bitcoin is gradually and cautiously integrating into traditional debt markets.