A Saskatchewan condo corporation has purchased thousands of dollars worth of bitcoin in hopes of eventually eliminating fees for residents.
Some experts say such cryptocurrency investments come with risks. But the lawyer who represented the condo corporation in the bitcoin sale says its board of directors' investment strategy is primed to deal with any volatility bitcoin might experience.
Regina-based Thornton Place Condominium Corporation says it recently bought 0.4 bitcoin for $25,000 through cryptocurrency platform Kraken and has allocated $700 per month for future purchases of the cryptocurrency.
Condo board treasurer Howard Ulmer says the bitcoin investment idea came from former board member and attorney partner at Clarke Johnston Estabrooks and Miller Law Office in Regina, Eric Miller.
Ulmer says the investment was designed to be conservative in order to mitigate risks.
"It appears that this may be a more stable time for investment in bitcoin currency. And the last number of years have been a considerable amount of fluctuation, and that doesn't mean it can't happen some more. But at least it appears to be a bit more stable," Ulmer said.
He says the investment amounts to about five per cent of the corporation's reserves and six per cent of its monthly operating fund.
University of Toronto finance professor Lisa Kramer warns that cryptocurrencies can be volatile and it is easy for investments in bitcoin to quickly erode in value.
She thinks it was wise for the board to limit its exposure to bitcoin, but says she hopes other condo corporations don't use the practice because of the risks it involves.
But Miller, the lawyer who spearheaded the investment idea, says he has done his homework.
"Under the [Saskatchewan] Trustee Act, there has to be consideration of the risk [in investing] … And so because of that the condo corporation did not take their entire reserve fund and invest it into bitcoin. Even if this goes to zero, it will not make or break the reserve fund and the ability of the condominium corporation to meet its ongoing demands in the future," Miller said.
He says that, while the board of directors understands the risk involved with this cryptocurrency investment, they do not see bitcoin value dropping to zero.
"U.S. banks [are now permitted] to use block chain cryptocurrency technology in offering all authorized banking services. PayPal has integrated bitcoin into their payment service in the United States, and it will be available in Canada soon," Miller said.
"So when you have institutions like MicroStrategy and Tesla investing multiple billions of dollars into it, when you have investment advisers like Fidelity and Citibank recommending that all of their clients should have between three and five per cent of their net worth invested in bitcoin … the adoption is here where it is a secure institutional class investment."
No Thornton Place Condominium Corporation residents have complained or voiced concern about the bitcoin investment, according to Miller.
He says that to his knowledge Thornton is the first condo corporation to invest in bitcoin.
"I think that this is a very progressive, very forward thinking condominium board."
About the Author
Laura is a reporter and associate producer for CBC Saskatchewan. She is also the community reporter for CBC's virtual road trip series Land of Living Stories. Laura previously worked for CBC Vancouver. Some of her former work has appeared in The Globe and Mail, NYLON Magazine, VICE Canada and The Tyee. Follow Laura on Twitter: @MeLaura. Send her news tips at email@example.com
With files from The Canadian Press and The Morning Edition
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