Thanks to an opportunistic real estate agent, a network of churches in Northern Colorado is using blockchain technology to securitize their churches. Pray for the investors.
From Nina BambyshevaForbes Employee
In In the Middle Ages, the church exerted influence over souls by selling indulgences – essentially money in the form of silver or gold coins exchanged for a faster release from purgatory. In the 21st century, a different kind of church gift is being offered in northern Colorado – one that doesn’t promise salvation but aims to buy Fort Collins’ oldest church.
Make way, GoFundMe. That’s where a modern twist on community investing comes in, led by local pastor Blake Bush, who is spearheading an effort to raise $2.5 million to purchase the Old Stone Church, a historic 19th-century stone building that his congregation has been renting for two years.
Rev. Blake Bush
Photo by Colorado House of Prayer
Bush, 57, is no ordinary minister. A former franchise salesman and 34-year veteran of church ministry, he and his wife founded the nondenominational Third Day Church and later founded One Hope of Northern Colorado, a nonprofit that runs the Colorado House of Prayer. “We are not a church,” Bush explains. “We are The Church, a network of churches working together to bless our community.” The Colorado House of Prayer, currently housed in the Old Stone Church, is a place where volunteers are in charge and anyone can say a prayer at almost any hour. Several denominations currently rent the space. For example, the Korean High Mountain Church holds a service every Sunday at 2:30 p.m.
In the summer of 2022, Pastor Bush plunged down the crypto rabbit hole when a friend introduced him to the cryptocurrency XRP. Ripple Labs, the company that developed the token, once promised its digital ledger would replace banks in processing trillions of global money transfers, but despite XRP being valued at $31 billion by crypto traders, Ripple has accomplished little in the past decade. Intrigued, Bush bought some XRP and soon found himself immersed in the possibilities of blockchain. “I just started researching and listening and trying to figure out what they’re doing, (Ripple’s) lawsuit against the SEC… who is the SEC, what do they do, and what does blockchain do? Where is this all going?” He says the idea of tokenizing real estate “popped into his head” in February.
“I heard the Lord say, ‘Symbolize the building,'” Bush says. “I just thought, what? I didn’t even know what that meant. I was interested in the technology, but I couldn’t have formed that sentence because it’s just not in my vocabulary. I prayed about it for years, and God said, ‘Son, get my house.'”
Enter Spokane, Washington-based REtokens, founded in 2022 by Tyler Vinson, 45, whose real estate brokerage firm Extant shares headquarters with the digital asset operation. Vinson, a local real estate agent who earned his BA in marketing from Eastern Washington University, has more than 20 years of experience and is the author of “Freedom Through Cash Flow.” Tokenizing properties like Bush’s Old Stone Church could be just the trick that breathes new life into Vinson’s Spokane Valley real estate practice.
In late May 2024, REtokens and Polymesh, a Switzerland-based company that provides software for the permissioned blockchain of the same name, announced they would jointly tokenize $30 million worth of real estate to “provide the real estate market with more liquidity and a larger pool of investors.” The press release did not mention the pair’s only other asset tokenization – a $2.25 million preferred stock offering for REtokens itself in August 2023. According to the private placement memorandum available to accredited investors, more than $150,000 of the proceeds would go toward repaying a loan to Vinson’s Extant, and REtoken’s payroll, which includes Vinson as CEO, would eat up nearly 24% of the funds annually. When you add in marketing costs, blockchain fees, and conference/travel costs, “corporate costs” would likely consume up to 40% of tokenization proceeds in the first year.
While the offering statement doesn’t provide details on how investors will actually earn a return on their blockchain-based investment in REtokens, the shares were initially offered at a price of 75 cents apiece with a minimum investment of $5,000. Vinson’s new blockchain company intends to take $10,000 up front for new tokenizations, plus up to 0.74% per year as an “equity fee” on newly minted tokens. So far, REtokens has raised less than half of the $2.25 million in tokenized preferred shares it began offering a year ago.
BThe Old Stone Church in Lake Bush is Vinson’s first real estate tokenization. The first phase, launched Friday, is for accredited investors with a minimum investment capital of $50,000 and aims to raise $2.5 million within the first year to purchase the 11,457-square-foot stone building. The Old Stone Church is currently owned by one of Blake’s congregants, Warren Yoder, the owner of a Chevrolet dealership and body shop in Northern Colorado, who bought it in 2022 for $2.2 million.
Eventually, the Stone tokens will be available on the secondary market, presumably to non-accredited church members at a price of $500 per token, with a minimum investment of $1,500. These tokens will trade indefinitely, or as the initiative’s website puts it, “until Jesus returns or the majority of investors and the board decide to sell.” Several locals have already joined Old Stone’s board, including the mayor of nearby Severance, Colorado, a mortgage broker and an insurance agent.
Potential investors don’t need a special crypto wallet; instead, they must open an account with REtokens and go through a know-your-customer process, similar to buying stocks at Fidelity, says REtokens’ Vinson. In fact, buyers are buying securities, not cryptocurrencies. The tokens won’t be traded on exchanges like Coinbase or Binance, but will only be marketable through REtokens. And because the small offering falls under Regulation D of the Securities Act of 1933, Old Stone Church is exempt from most disclosure requirements. Token holders also have no say in how the church is managed.
When Bush was asked what the consequences would be if, for example, a Satanist grabbed the majority of the tokens, he replied, “I would say, ‘Great, thanks, we’re introducing you to Jesus.'” The Old Stone Church is governed by its board of directors and an operating agreement, he explains, so even a majority owner cannot decide how the building is used. Token holders can only vote for a board chair and for or against the sale of the building.
Bush’s Colorado House of Prayer is non-denominational: “All churches that profess Jesus are welcome to participate, regardless of their theological background.”
Photo by Colorado House of Prayer
Unlike traditional church and synagogue fundraising, which are offered by nonprofit organizations and are therefore tax-free, congregants who choose to “invest” in their church receive no tax deductions. Token holders are subject to normal income and capital gains taxes, which come in the form of K-1 partnership distributions. “Even Jesus had to pay taxes and have a treasury,” says Bush.
As for returns, the pitch deck predicts “a 2-3% annual increase for each token, commensurate with the increase in real estate value in downtown Fort Collins. In addition, there will be a small dividend each year based on the modest rent the LLC receives.” Pastor Bush is serious about managing investor expectations. “They’re not in it to make a profit. They’re in it to do good in the community,” he says. The pitch deck points out that investors will use their money to “advance the kingdom.”
The Old Stone Church is the first tokenized church, according to Graeme Moore, head of tokenization at Polymesh, but it may not be the last. Mark Elsdon, a pastor and developer from Madison, Wisconsin, and author of Gone forever?writes that over the next decade, up to 100,000 Christian church properties—a quarter to a third of all churches in the United States—are expected to be sold or converted to other uses.
Hundreds of these properties are already being purchased by companies to use as offices, restaurants, co-working spaces and hotels. New Yorkers may remember the 1983 conversion of the 1844 Gothic Revival Episcopal Church of the Holy Communion into the Limelight nightclub, notorious for its drug-fueled parties. A more recent example is the Good Shepherd Lutheran Church on Lake Opeka in Des Plaines, Illinois, which reopened as an upscale Mediterranean restaurant.
Pastor Bush’s vision extends far beyond Fort Collins. He dreams of creating a foundation to help others tokenize their historic buildings. Perhaps he’s onto something. Considering the zeal of the two communities, religion and blockchain could be a match made in heaven.
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