New Hampshire just said no to what would have been one of the most ambitious experiments in public crypto finance. The state’s Executive Council voted 3-2 on July 8 to reject a proposal that would have allowed up to $100M in Bitcoin-backed municipal bonds to hit the market.

The plan was straightforward in concept, if not in execution: let private-sector digital asset firms tap into municipal bond markets using Bitcoin as collateral. No taxpayer money on the line, no impact to the state’s general obligation credit.

How the deal was structured

The proposal came from New Hampshire’s Business Finance Authority, which had given its own board approval back on November 18, 2025. Jefferies, the investment bank, structured the deal as a private placement, meaning it wouldn’t have been sold to everyday retail investors on the open market.

The bonds required 160% overcollateralization. In English: for every $100 in bonds issued, $160 worth of Bitcoin had to sit behind them. If the value of that Bitcoin collateral fell below 130% of the bond principal, automatic liquidation triggers would kick in, selling the Bitcoin to protect bondholders.

Moody’s, the credit rating agency, took a look at the whole setup and assigned it a Ba2 rating. That’s speculative grade, two notches below investment grade.

The political divide

Governor Kelly Ayotte was the proposal’s most visible champion, framing the initiative as a historic opportunity to position New Hampshire as a leader in digital finance innovation.

But the Executive Council, a five-member body unique to New Hampshire’s government that must approve major contracts and financial decisions, wasn’t convinced. During public hearings, councilors voiced concerns about Bitcoin’s price volatility. Bitcoin has historically experienced drawdowns of 50% or more during bear markets. Bitcoin lost roughly 77% of its value from peak to trough during the 2022 crash. At those levels, the 130% liquidation trigger would have been breached long before anyone could blink.

What this means for crypto-municipal finance

For other states watching this play out, the Moody’s Ba2 rating is probably the most instructive data point. Even with overcollateralization and automatic liquidation mechanisms, the best rating the structure could achieve was speculative grade. That limits the investor pool significantly, since many institutional buyers are restricted from holding anything below investment grade.

Until someone can get an investment-grade rating on a Bitcoin-backed municipal bond, the institutional adoption story in public finance remains more aspiration than reality.