Reddit Liquidates Most of Its Cryptocurrency Holdings in Q3 Missing October Bitcoin Surge

Reddit Liquidates Most of Its Cryptocurrency Holdings in Q3 Missing October Bitcoin Surge

Reddit, the popular online community platform, disclosed in a recent regulatory filing that it sold off a significant portion of its cryptocurrency holdings during the third quarter of 2024. The company noted that the financial impact of this sale was “immaterial” for the period. The decision to liquidate these assets comes at a time when Bitcoin has experienced a notable surge in value throughout October, raising questions about the timing of Reddit’s divestment.

Background on Reddit’s Crypto Holdings

Reddit has engaged with cryptocurrencies primarily for specific applications within its product and engineering teams. The platform previously allocated part of its excess funds to Bitcoin and Ether but has since pivoted its strategy. As of September 30, 2024, Reddit reported that it had disposed of all Bitcoin and Ether previously held for treasury purposes. Despite this move, the company hinted at the possibility of acquiring more cryptocurrencies in the future, indicating an ongoing interest in the digital asset space.

In its filing, Reddit stated, “We have held cryptocurrencies and experimented with blockchain technology and may do so in the future which may subject us to exchange risk and additional tax legal and regulatory requirements.” This acknowledgment underscores the complexities associated with cryptocurrency investments and the regulatory landscape.

Board-Approved Crypto Investment Strategy

Reddit's approach to cryptocurrency investments is governed by a strategy that requires board approval for any new ventures involving digital assets. This policy restricts treasury investments to Bitcoin, Ether, and other cryptocurrencies that regulatory bodies, such as the SEC or CFTC, have indicated are not classified as securities. However, Reddit clarified that its decisions are based on internal risk assessments and are not strictly bound by external regulatory signals.

Accounting Changes and Future Outlook

In addition to its investment strategy, Reddit announced plans to implement a new accounting standard in 2025. This standard will require the company to report cryptocurrencies at their current fair market value rather than their original cost basis, reflecting a shift towards a more dynamic approach to asset valuation in the rapidly evolving digital currency landscape.

The social media giant first revealed its cryptocurrency holdings earlier this year after submitting a filing with the SEC as part of its preparations to go public under the ticker “RDDT.” Reddit’s foray into the crypto market has positioned it among other corporate giants such as MicroStrategy, Marathon Digital Holdings, Riot Platforms, and Tesla, which are recognized as some of the largest corporate holders of Bitcoin, according to Bitcoin Treasuries.