Bitcoin’s New Bond: A Cryptic Leap into Public Finance!

by

Markets

What to know:

  • The New Hampshire Business Finance Authority, that enigmatic entity, prepares to issue what appears to be the first rated bitcoin-backed bond-a venture as sensible as teaching a cat to recite poetry, yet here we are.
  • The bonds are backed by bitcoin, that ever-elusive phantom of modern finance, held in custody by BitGo, a name that sounds like a futuristic bank but is, in fact, a real company.
  • The securities are limited-recourse, meaning New Hampshire’s public funds remain as safe as a teapot in a hurricane, while the state acts as a mere conduit issuer, a financial tightrope walker balancing on crypto’s precarious edge.

The New Hampshire Business Finance Authority is set to issue what appears to be the first rated bitcoin-backed bond of its kind, marking a step toward integrating crypto into traditional public finance. A step, perhaps, toward the inevitable collapse of all things, but hey, progress!

The bonds received a provisional Ba2 rating from Moody’s Ratings, two notches below investment grade. They will be issued through the Business Finance Authority of the State of New Hampshire and are backed by bitcoin held as collateral, according to a press release. A press release so dry, it could cure dehydration.

“The Rated Bonds will be collateralized by a loan… backed by Bitcoin, a digital currency,” Moody’s said in its report. A digital currency! How avant-garde.

The structure relies on bitcoin rather than cash flow from a business. Bondholders are repaid through the liquidation of BTC held in custody by BitGo, which will be sold if needed to meet interest and principal payments. A financial ballet where the only dance is chaos.

The deal includes safeguards common in structured credit, including 1.6x overcollateralization and triggers that force liquidation if the loan-to-value ratio deteriorates. Because nothing says “safety” like a 1.6x overcollateralization, which is just a fancy way of saying, “We’re probably going to lose a lot of money, but let’s pretend we’re prepared.”

Moody’s said its rating reflects “risks associated with the transaction’s collateral, structure and operation,” including bitcoin’s volatility. The agency used a 72% advance rate and short liquidation windows to model potential downside scenarios. Because nothing says “confidence” like modeling a 72% advance rate and short liquidation windows.

The bonds are limited recourse, meaning no public funds are at risk. “No public funds of the State of New Hampshire… may be used to pay amounts under the Rated Bonds,” Moody’s said. A noble sentiment, but let’s not forget, the state is still the one holding the bag-just not the one filled with actual money.

That distinction matters. While the deal uses a state authority, it does not carry state credit backing. Instead, it resembles conduit or project finance, where the issuer serves as a pass-through. A pass-through, indeed-of absurdity.

Still, the structure places bitcoin into a part of the financial system where it has rarely appeared: rated debt issued through public channels. A rare feat, akin to convincing a squirrel to organize a library.

The Ba2 rating places the bonds in speculative-grade territory, but also signals that credit agencies are developing frameworks to assess crypto-backed instruments. Frameworks, of course, that are as solid as a house built on sand and existential dread.

The deal arrives as institutions continue to test ways to use bitcoin beyond trading or treasury holdings. The Labor Department on Monday proposed a rule following an executive order from President Donald Trump that directed regulators to expand access to digital assets in retirement portfolios, marking another step in that direction. Because nothing says “economic stability” like a retirement portfolio powered by a cryptocurrency that once had a value of zero.

Read More

2026-04-01 02:11