One condominium corporation has purchased bitcoin as a reserve fund investment.
Thornton Place in Regina has announced the first in an ongoing series of planned bitcoin purchases in the amount of $25,000 which represents five percent of their $500,000 reserve fund. The corporation has allocated $700 per month ongoing for this purpose. This is believed to be the first purchase of bitcoin by a condominium or strata corporation in Canada.
Investing in bitcoin allows the community to “gain a limited exposure to a high-performing asset class without jeopardizing any of the long-term goals of the corporation and its owners” states the condo board. This strategy is expected to continue for a ten-year period using funds from their operating account. Their hope is that this strategy will one day permit the elimination of condominium fee contributions.
Bitcoin is a high-risk investment with the potential for very high returns. If unsuccessful, bitcoin investments could become worthless.
Most of a reserve fund balance remains untouched for many years until needed. It makes sense to invest these funds during this period.
In Ontario, the Condo Act limits reserve fund account investing to eligible financial instruments 1) issued or guaranteed by the Government of Canada or one of the Provinces; or 2) issued by an institution located in Ontario insured by the Canadian Deposit Insurance Corporation (CDIC) or the Deposit Insurance Corporation of Ontario. These are supposedly safe investments that guarantee return of principal. They also provide investment returns below the current rate of inflation thus ensuring a “loss” each year. Bitcoin is not an allowable investment for reserve fund monies in Ontario.
The Condo Act, Section 115 (8) requires each condominium corporation to have an investment plan.