Investing Security Deposits?

[Alex SImon]

A friend of mine in a different investing group asked an interesting question and so I'm posting it here in hopes that someone who knows more than me will be able to answer with certainty.  He's very into investing in Cryptocurrency and wanted to know if, as a landlord, you were allowed to invest the monies provided by your tenants as security deposits.  For him, this would take the form of converting the currency into crypto (Bitcoins and such) and holding them in that form while they appreciate in value, then returning the tenants' deposits upon their departure and keeping the excess value for himself.  However, I assume that this could be applied to stocks, mutual funds, or anything else that yielded a profit but carried a small amount of risk, and I'm further assuming that he would have some way of guaranteeing the tenant would receive their deposits back even if he messed up in the market.

Now, I know that in real estate transactions you're not allowed to commingle funds from business and personal accounts, but I'm hazy on the subject of renters' deposits, specifically.  Anyone have any input?  Are landlords allowed to invest their tenants' deposits for financial gain?