Reddit Holds Crypto Assets But Faces Regulatory Hurdles To Fully Utilizing Web3 Potential
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Reddit holds some bitcoin, ether, and Polygon's MATIC token in its corporate treasury. It believes Ethereum is not likely a security based on public statements from regulators.
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Reddit says it faces regulatory risks that may prevent accessing or selling its crypto holdings. Two rules shaping its approach are the SEC's SAB 121 custody requirements and GAAP accounting rules.
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Reddit had to discontinue its Community Points crypto rewards program due to the custody requirements of SAB 121. True self-custody likely can't scale for a platform Reddit's size.
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GAAP rules mean Reddit can only recognize crypto losses, not gains, on its balance sheet. This may adversely affect financial reporting. New guidance will allow recognizing fair value.
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Reddit sees significant potential for crypto, though notes blockchain still has an unstable legal footing and uncertain consumer demand. Its product teams are the main ones using crypto for now.