Reddit Sells Cryptocurrency, Updates Investment Strategy

October 31, 2024 BACK TO NEWS

Reddit sells its crypto holdings, including Bitcoin and Ether, and introduces a new investment strategy based on fair market value - IcoHolder.

In a significant shift in its approach to cryptocurrency, Reddit has announced that it sold off most of its crypto holdings during the third quarter of 2024. In a recent filing, the social media platform indicated that the financial impact of this sale was “immaterial” for the period, suggesting that the decision was more strategic than financially motivated.

Historically, Reddit had allocated a portion of its excess funds to Bitcoin and Ether, using these cryptocurrencies primarily for operational purposes within its product and engineering teams. However, by September 30, 2024, the company had completely disposed of all Bitcoin and Ether previously held for treasury purposes. Despite this sell-off, Reddit continues to acquire Ether and Matic as payment for transactions involving specific virtual items, hinting at an ongoing interest in the cryptocurrency space.

Reddit stated, “We have held cryptocurrencies and experimented with blockchain technology, and may do so in the future,” acknowledging the potential risks associated with exchange fluctuations and additional regulatory obligations.

As part of its new strategy, Reddit revealed that any new cryptocurrency ventures would require board approval. This policy restricts treasury investments to cryptocurrencies that regulatory bodies, such as the SEC or CFTC, have indicated are not classified as securities. However, the company clarified that it bases its investment decisions on its own risk assessments, maintaining some flexibility amid regulatory guidance.

In a further development, Reddit plans to adopt a new accounting standard by 2025 that mandates cryptocurrencies be reported at their current fair market value instead of their original cost basis. This change aligns the company with a growing trend among corporations to adapt to the evolving landscape of digital assets.

With major companies like MicroStrategy, Marathon, Riot Platforms, and Tesla leading the charge as the largest corporate holders of Bitcoin, Reddit’s decision to streamline its crypto holdings marks a noteworthy moment in the ongoing conversation about the role of digital currencies in corporate finance.