Social media giant Reddit has quietly purchased Bitcoin and Ethereum with some of its excess cash and is keeping an undisclosed amount of the two tokens in its treasury for investment purposes.
The details of the social media giant’s crypto exposure were revealed in its initial public offering (IPO) prospectus, which was filed with the SEC on February 22. The filing comes after months of speculation about the company’s plans to go public.
The company did not disclose how many shares it plans to sell or the price range for the offering. However, it is expected to be one of the biggest technology IPOs of the year.
Cryptocurrency Exposure
The filing makes it clear that Reddit’s crypto holdings are limited to Bitcoin and Ethereum, both established players in the crypto space. The revelation was somewhat of a surprise, given the company’s cautious approach to crypto in recent years.
According to the document, Reddit’s board of directors has approved the investment policy, which focuses on “risk mitigation” by investing only in cryptocurrencies that are “unlikely to be considered a security” by regulators.
The filing did not disclose how much Bitcoin and Ethereum are in the treasury, or how long the company has been buying them.
While the disclosed crypto holdings are limited to treasury purposes, the filing also noted that Reddit had acquired Ether and Matic for the sale of virtual goods. It added that the amounts had been “immaterial” in recent years.
The filing acknowledges the inherent risks associated with cryptocurrencies, including volatility, cybersecurity threats and potential regulatory changes. It also highlights the accounting challenges posed by treating cryptocurrencies as intangible assets with indefinite lives and the coming changes in accounting standards.
Digital infrastructure
Reddit’s IPO signaled broader ambitions to integrate blockchain technology into its vast network of forums and discussions. It described the platform’s ongoing efforts to diversify its revenue streams and improve its digital infrastructure, with cryptocurrencies playing a crucial role in this strategy.
The filing also noted exploring decentralized applications (dApps) and blockchain’s potential to provide new forms of content creation, sharing and ownership. It also highlighted blockchain’s potential to improve user experience and create new opportunities for community engagement and monetization.
Reddit’s IPO filing offers a glimpse into a social media giant that is cautiously embracing the world of cryptocurrencies. While the company’s current exposure is limited, its openness to experimentation and focus on regulatory compliance suggests potential for future growth and innovation in this area.