Companies are going public again after a dearth of IPOs in 2023, and one of the biggest and most interesting to join the pack is Reddit. Long known as the "front page of the internet," Reddit is known for the quirky communities that populate its subreddits (here is avocados-gone-wild for instance) and more recently as a civilized place to get your news. Unsurprisingly for the eccentric site, its IPO will have a twist in the form of a class of shares reserved for regular readers, but one thing the Reddit listing will not feature is anything to do with crypto.

You may recall that, until recently, Reddit was dabbling in blockchain in the form of Community Points that it gave out as rewards to some contributors, and stored first on the Ethereum then Algorand chains. Meanwhile, the site has long had thriving communities, most notably r/crypto, dedicated to parsing every development and piece of news related to every corner of the blockchain world. While those communities remain vibrant, the site decided to axe Community Points in October, in part due to the "changing regulatory environment."

This is not surprising. The process of going public is complicated and expensive, and involves the SEC poking around all aspects of your business for potential funny stuff that could harm investors. It's not hard to imagine a securities lawyer probing Reddit's IPO filing and saying something like "What the hell is this blockchain stuff? This could be construed as an illegal security," and the company quickly deciding to snuff anything token-related.

If that's the case, this is another indictment of U.S. policymaking when it comes to financial innovation. Not only does the menacing regulatory climate mean that up-and-coming companies could be dissuaded from even experimenting with crypto, but the possibility of distributing securities via blockchain—a technology that offers superior recordkeeping—feels as remote as ever.

To be fair, Reddit's decision to distance itself from crypto can't be blamed entirely on SEC Chair Gary Gensler's burn-it-all-down approach to the sector. As a Reddit executive told TechCrunch, the process of managing rewards points on a blockchain proved neither cheap nor easy, while the overall demand for crypto tokens was scant. In describing the number of subreddits affected by the end of Community Points, the exec explained “you’d be able to count them on one hand and have a finger or two left over.”

The comment is harsh but also understandable, reinforcing the simple fact that Web3 tools are clunky and unappealing to ordinary people. I should add this is changing quickly—I recently opened my MetaMask wallet for the first time in months and found its interface much improved. At the same time, blockchain transaction prices have been dropping quickly though not far enough. Call me an optimist but I do think that, a decade from now, some companies will use blockchain to go public with the help of enlightened regulators. For now, though, Reddit's impending IPO will mean nothing for crypto other than a chance to think about what could have been.

Jeff John Roberts
[email protected]
@jeffjohnroberts

This story was originally featured on Fortune.com