Ahead of its initial public offering (IPO), Reddit has disclosed its cryptocurrency holdings, with Bitcoin, Ethereum, and Polygon on the company’s books.
Popular social media platform Reddit has been a vocal supporter of the Web3 movement. The platform has integrated NFTs for its communities and occasionally experimented with blockchain-based points rewards programs.
Interestingly, Reddit has now moved deeper into the crypto realm. In its recently filed IPO registration statement with the United States Securities and Exchange Commission (SEC), the company disclosed that it now holds cryptocurrencies on its balance sheet. Precisely, the company spent a portion of its excess cash reserves in acquiring Bitcoin (BTC) and Ether (ETH) for its treasury.
Additionally, the company purchased ETH and Polygon (MATIC) to be used as a form of payment for “certain virtual goods” available on Reddit. Although the company notes that the ETH and MATIC realized from virtual goods are immaterial at this time, it confirmed that it may continue to add BTC and ETH to its treasury as well as continue its experiment with virtual goods.
Why Reddit Chose Only BTC and ETH for Treasury
In its filing, Reddit explained the reason why it had chosen only BTC and ETH for treasury purposes. The company cites current regulatory developments as suggesting that both are “likely not a security” under U.S. laws.
Reddit also acknowledged that it may add other crypto assets to its balance sheet if future regulatory guidance shows that the cryptocurrency is not a security. Recall that the subject of crypto assets being a security has become a key contention between crypto-related businesses in the U.S. and the SEC.
Hence, Reddit’s restriction to BTC and ETH appears to be a regulatory caution rather than being unwilling to explore other cryptocurrencies. When the company ended its crypto-based points rewards in November, it also cited regulatory concerns as one reason for sunsetting the program.
Meanwhile, if and when Reddit completes its IPO, it will join the crop of public-traded companies that give investors exposure to Bitcoin and the crypto ecosystem. Long-standing players such as MicroStrategy have soared in value since adopting a Bitcoin standard, a success that Reddit may hope to replicate.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
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