Reddit Reveals Small Cryptocurrency Holdings in IPO Filing
Reddit has disclosed that it holds a small amount of cryptocurrencies on its balance sheet, according to its filing for an initial public offering (IPO) with the Securities and Exchange Commission (SEC). The company stated that it invested some of its excess cash reserves in Bitcoin and Ether, and also acquired Ether and Matic as a form of payment for certain virtual goods. However, Reddit clarified that the net value of its cryptocurrency holdings was immaterial. The filing also mentioned that Reddit limited its treasury holdings to bitcoin, ether, and other cryptocurrencies that are unlikely to be viewed as securities by regulators.
Reddit’s History with Crypto
In the past, Reddit has engaged in various crypto-related projects. Notably, it launched Polygon-based NFTs called Collectible Avatars, which gained significant popularity. Additionally, the platform experimented with blockchain-based rewards called Community Points for several subreddits but discontinued the program due to regulatory and scalability issues.
SEC Approval Required for Reddit’s IPO
In order to go public, Reddit needs approval from the SEC. The company initially submitted its IPO paperwork confidentially in December 2021. The exact details regarding the number and price of shares have not been disclosed yet. Several major Wall Street institutions, including Morgan Stanley, Goldman Sachs, JPMorgan, and Bank of America Securities, are leading the underwriting process. Reddit evaluates its cryptocurrency holdings regularly for impairments and records them as general and administrative expenses on its income statement.
Hot Take: Uncertainty Surrounding Crypto Adoption
While Reddit acknowledges the significant potential of cryptocurrencies and blockchain technology, it emphasizes the uncertain nature of their long-term adoption by consumers and businesses. The company’s IPO filing indicates caution regarding the future of cryptocurrencies and their prevalence. As Reddit prepares to go public, its small cryptocurrency holdings demonstrate its involvement in the crypto space, albeit on a limited scale.
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