A 32-unit Regina, Saskatchewan-based condo corporation recently made a $25,000 investment in Bitcoin, through the cryptocurrency platform Kraken. The board of directors has also set aside $700 to make future monthly Bitcoin purchases.
It can be a tempting investment opportunity, especially with the value of Bitcoin outperforming gold in 2020 by more than 150% [Source: coindesk.com/bitcoin-prices-in-2020-heres-what-happened]. You may recall when Tesla CEO Elon Musk made headlines in February with his $1.5 billion purchase of the cryptocurrency.
Condo corporations looking for a quick way to earn revenue and help defray monthly fees for residents should think twice about making this type of investment. The legislation governing condos in each province carry their own investment restrictions.
Ontario’s Condominium Act
Condo Corporations in Ontario are bound by the provisions in Section 115(5) of Ontario’s Condominium Act, 1998 (the “Act“). The Act restricts the types of investments that condo corporations in Ontario are permitted to make. These are limited to ‘safer’ investments such as bonds, debentures, GICs, deposit receipts or notes, or similar instruments that are of minimal risk and that are:
- issued or guaranteed by the government of Canada or any Canadian provincial government;
- issued by an Ontario-based institution and are insured by the Canada Deposit Insurance Corporation, or
- issued by the Deposit Insurance Corporation of Ontario.
Condo Corporations should be obtaining advice from investment advisors who understand the requirements of the Condominium Act and who can provide a formal investment plan that is fully compliant with the Act.