Bitcoin makes its debut in the public bond market as Moody’s assigns a rating to a groundbreaking cryptocurrency transaction.

A state authority in New Hampshire is preparing to issue a pioneering bitcoin-backed bond with a Ba2 rating, representing an initial assessment of how cryptocurrency can serve as collateral within conventional public finance markets.

(Ramin Talaie/Corbis via Getty Images)

Key points:

• The New Hampshire Business Finance Authority is preparing to issue what appears to be the first rated bitcoin-backed bond, provisionally rated Ba2 by Moody’s, indicating a new convergence of cryptocurrency and public finance.
• The bonds are secured by bitcoin held in custody by BitGo.
• The securities are limited-recourse, ensuring that New Hampshire’s public funds remain protected, highlighting that the state is acting solely as a conduit issuer while rating agencies refine their criteria for assessing crypto-backed debt.

The New Hampshire Business Finance Authority is on track to issue what seems to be the inaugural rated bitcoin-backed bond of its type, representing progress toward the integration of cryptocurrency into conventional public finance.

The bonds have been assigned a provisional Ba2 rating by Moody’s Ratings, which is two levels below investment grade. They will be issued via the Business Finance Authority of the State of New Hampshire and are underpinned by bitcoin BTC$68,096.62 held as collateral, as stated in a press release.

“The Rated Bonds will be secured by a loan… backed by Bitcoin, a digital currency,” said Moody’s in its report.

The arrangement relies on bitcoin instead of cash flow from a business. Bondholders will receive repayments through the liquidation of BTC held in custody by BitGo, which will be sold as necessary to cover interest and principal payments. The structure includes safeguards typical in structured credit, such as 1.6x overcollateralization and triggers to enforce liquidation if the loan-to-value ratio declines.

Moody’s indicated that its rating reflects “risks linked to the collateral, structure, and operation of the transaction,” including the volatility of bitcoin. The agency applied a 72% advance rate and short liquidation periods to simulate potential downside scenarios.

The bonds are limited recourse, meaning that no public funds are exposed to risk. “No public funds of the State of New Hampshire… may be utilized to fulfill amounts due under the Rated Bonds,” Moody’s stated.

This distinction is significant. Although the transaction involves a state authority, it does not provide a backing of state credit. Instead, it functions similarly to conduit or project finance, where the issuer acts as a pass-through entity.

Nonetheless, the structure integrates bitcoin into a segment of the financial system where it has seldom been present: rated debt issued through public channels.

The Ba2 rating situates the bonds within the speculative-grade category, while also indicating that credit agencies are formulating frameworks to evaluate crypto-backed instruments.

The deal arrives as institutions continue to explore methods to utilize bitcoin beyond trading or treasury holdings. The Labor Department proposed a rule on Monday following an executive order from President Donald Trump, which instructed regulators to broaden access to digital assets in retirement portfolios, marking further progress in that direction.