“I’m not opposed to Bitcoin or cryptocurrency in general,” said Karen Liot Hill, the lone Democrat. “But I do think that we are being asked as a state to lend a kind of legitimacy to a financial transaction, which is from … an emerging asset class that has been shown to be very volatile.”
James Key-Wallace, executive director of the Business Finance Authority, pushed back.
“The only quibble I would have is … I wouldn’t call them ‘emerging,’” he said. “They’ve ‘emerged.’ They’re here. They’ve been around awhile.”
That didn’t quell Liot Hill’s concern. If this Bitcoin-backed bond is actually novel, then it comes with some risk of getting it wrong, she said, adding that the councilors and the public would benefit from more time digesting the implications of this plan.
“It may well be that all of your projections for the future are accurate and there’s nothing to be worried about here,” she said. “But it also may be that there is something to be worried about.”
Key-Wallace explained during the meeting that this plan would carry zero risk for New Hampshire taxpayers. That’s because the loan agreement would establish a conduit between private investors and a private borrower, with the cryptocurrency as collateral. The state wouldn’t be responsible for paying anything off, even if the price of Bitcoin were to tank.
If the price of Bitcoin were to rise substantially over the plan’s three-year term, then the Business Finance Authority could collect millions of dollars in fees, which would then be reinvested into a range of initiatives across the state for small businesses, child care, housing, and economic development, he said. And this deal could lead to “several more,” he added.
Ayotte, who signed a law last year giving the state treasurer discretion to invest in Bitcoin in the future, said on Wednesday there is value in being first to embrace technology in new ways.
“I think it’s something that we really need to think about,” she said, “because our state continues to thrive when we are continuing to be innovative — and especially if we can do so in a way that protects the taxpayers.”
Liot Hill moved to table the proposal, but none of her colleagues seconded the motion, which led to the final vote killing the proposal. Janet Stevens and David Wheeler joined her in opposition, while Joseph Kenney and John Stephen voted in favor of the plan.
Key-Wallace said in an email Thursday that his team remains excited about New Hampshire’s role as a leader in “the digital asset economy.”
“We heard lots of support for the bond at the Executive Council, and also recognize that others needed more time to review the proposal,” he said. “That is a fair response and squarely within the Executive Council’s role as responsible stewards of the Granite State.”
Key-Wallace said he is committed to providing any information the council may need, and he would be happy to present this idea to them again in the future.
A version of this story appears in Globe NH | Morning Report, a free email newsletter focused on New Hampshire, including great coverage from the Boston Globe and links to interesting articles elsewhere. Sign up here.
Steven Porter can be reached at steven.porter@globe.com. Follow him @reporterporter.
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