A US State Signs First-of-its-Kind Bitcoin (BTC) Decree!
While the US is trying to erase the traces of the longer-than-expected government shutdown, a state has made a first-of-its-kind move against Bitcoin.
Accordingly, the United States state of New Hampshire has approved the issuance of a Bitcoin (BTC)-backed municipal bond.
A First-of-its-Kind Bitcoin Move in the US!
The New Hampshire Business Finance Authority (BFA) has approved a $100 million Bitcoin-backed municipal bond, the first of its kind in the United States, according to Crypto in America, a cryptocurrency-focused media outlet.
This was the first instance of a US state government using Bitcoin as collateral for such a financial instrument.
Fees and returns from the BTC collateral will fund the state's Bitcoin Economic Development Fund to support innovation and entrepreneurship. The collateral will be held by the custodian BitGo.
According to details, municipal bonds are designed to allow a company to raise funds without selling its Bitcoin holdings. The collateral ratio is set at approximately 160% of the bond amount, and if the Bitcoin price declines and collateralization falls below 130%, an automatic collateral liquidation mechanism will be activated to protect investors.
New Hampshire's move, the first example of a digital asset being linked to the traditional bond market, raises the possibility of opening the doors to a new structure for the $140 trillion global debt market.
This decision follows the state's previous decision to allocate up to 5% of its treasury to digital assets.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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