Bitcoin Enters Public Bond Market with First-Rated Deal

A landmark deal in the world of cryptocurrency has been reached as the New Hampshire Business Finance Authority prepares to issue the first rated bitcoin-backed bond. This move marks a significant step towards integrating crypto into traditional public finance, allowing institutions to use bitcoin beyond trading or treasury holdings.

The bonds 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. Moody's Ratings has given the bonds a provisional Ba2 rating, which indicates speculative-grade territory but also signals that credit agencies are developing frameworks to assess crypto-backed instruments.

The deal relies on bitcoin rather than cash flow from a business, with bondholders repaid through the liquidation of BTC held in custody by BitGo. The structure includes safeguards such as 1.6x overcollateralization and triggers that force liquidation if the loan-to-value ratio deteriorates.