This past week, Coinbase joined the S&P 500, one of the world’s most elite stock indexes — a triumph for the crypto firm, which spent much of the 2020s battling US government agencies like the SEC and Commodity Futures Trading Commission for its survival.
But this attainment is not about one company alone.
“This is more than an achievement for Coinbase; it’s a landmark for the broader crypto and blockchain industry,” said Meryem Habibi, chief revenue officer of Bitpace. Coinbase joining the S&P 500 doesn’t just boost the owner of the largest US cryptocurrency exchange. “It cements the legitimacy of an entire asset class,” she told Cointelegraph.
Jason Kennard, head of business development at ARK Invest Europe, told Cointelegraph that for the first time, a crypto-native firm had met the stringent profitability, liquidity and market cap requirements of “the most iconic benchmark index” in global markets, adding:
It sends a strong signal to institutional investors: Crypto infrastructure has matured into a credible, systemic part of the financial ecosystem.
It is a milestone event, Steve Sosnick, chief strategist at Interactive Brokers, told Cointelegraph, “because whether they want it or not, or know it or not, equity investors who buy S&P 500 index funds will now have crypto exposure via COIN.” Indeed, Coinbase could now get billions of dollars in passive investor flows just from becoming part of the S&P 500.
“What’s remarkable about this is that just a few months ago, the company was engaged in an intense legal battle with the SEC, which was charging that its platform was illegal because it was trafficking in unregistered securities,” Benchmark analyst Mark Palmer told CNBC.
“This normalizes crypto exposure in conservative portfolios that might otherwise avoid digital assets” and brings with it indirect adoption by institutional investors, retirement plans and sovereign funds that has broader industry significance, added Habibi.
Still, it was only a matter of time before some crypto firm would be brought into the S&P 500 fold, Russell Rhoads, clinical associate professor of financial management at Indiana University’s Kelley School of Business Indianapolis, told Cointelegraph. “It does make sense for COIN or some other crypto-related firm to be in the index, as the industry is becoming more important to the global economy and you want the S&P 500 constituents to be representative of the economy.”
Separately, Coinbase also reported a data breach last week, a “compromise of passwords or private keys” that could eventually cost the crypto exchange $180 million to $400 million.
The hack has exposed the personal information of tens of thousands of users and has left them vulnerable to robberies and kidnappings, as seen in the wake of the 2021 Ledger breach.
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Meanwhile, inclusion in the S&P 500 means that “index funds, including those managed by BlackRock, Vanguard and State Street, must now allocate capital to Coinbase,” Habibi told Cointelegraph. “This means billions of dollars in passive investment will flow into a crypto-native business.”
$10 billion in new capital inflows?
How much money could flow Coinbase’s way? Passive investing (e.g., investing in an ETF that mirrors the S&P 500) has proliferated in recent years. S&P DJII estimated in 2024 that roughly $10 trillion is now passively tracking the S&P 500.
If Coinbase gets only a 0.1% weighting — a share that Habibi thinks reasonable — it could reap $10 billion in potential capital flows without a single investor actively choosing crypto exposure.
S&P Dow Jones Indices Annual Survey of Assets. Source: S&P Global
Institutional acceptance is arguably the bigger story here, Habibi continued. Coinbase’s inclusion in the index signals that public markets now reward not just growth, but regulatory compliance, operational maturity and long-term vision in the crypto space. She added:
The move paves the way for other crypto firms — e.g., Circle, Chainalysis, Fireblocks — to aim for public listings and eventual index inclusion, potentially triggering a new wave of institutional-grade crypto finance companies.
It may be premature to speak yet about a convergence of the crypto and TradFi economic sectors, however, as some are doing. “Crypto, overall, is still a very small fraction of the overall economy,” Seoyoung Kim, associate professor of finance at Santa Clara University, told Cointelegraph. “I think the greater convergence coming ahead will be increasing institutional adoption of blockchain-based protocols and tokenization.”
A convergence of economies?
Others disagree. “We have been talking about TradFi-crypto convergence for quite some time,” Owen Lau, executive director at Oppenheimer & Co, told Cointelegraph. “It is happening and will continue to happen. Robinhood/Bitstamp, Kraken/Ninja Trader and Ripple/Hidden Road are good examples.”
“We’re not quite at full convergence, but we’re definitely past the separation phase,” opined Kennard. He, too, referenced crypto ETFs but also pointed to recent events, like Galaxy Digital’s listing on the Nasdaq exchange this month and Coinbase’s role as custodian for multiple ETFs, demonstrating that TradFi firms are now looking to crypto-native firms for some infrastructure needs. “Regulatory clarity is still emerging, but institutional rails are being laid fast,” said Kennard.
More equity listings mean that crypto companies can tap markets as a source of liquidity, but that doesn’t necessarily involve a convergence of financial channels, stated Interactive Brokers’ Sosnick. “Convergence will occur when a traditional finance company truly adopts crypto as a means of payment.”
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Still, Habibi pointed to convergence in infrastructure solutions, like JPMorgan’s Onyx platform that is being used to settle billions in intraday repo transactions using blockchain technology, Nasdaq’s digital asset custody infrastructure launch and PayPal’s launch of its PayPal USD (PYUSD) stablecoin, which integrates crypto rails and consumer fintech.
“These examples underscore a shift in which crypto and TradFi are no longer competing but co-evolving. Crypto-native firms are beginning to resemble traditional financial institutions in structure, while banks are adopting decentralized technologies to improve efficiency, reduce settlement friction, and expand asset reach,” Habibi explained.
Who is next?
Now that Coinbase has broken ground, should one expect other crypto firms to gain S&P 500 inclusion soon? Maybe not.
A large market capitalization is needed to join the S&P 500, but that alone is not sufficient. There are other criteria. A candidate must have been profitable in the most recent year and quarter to qualify, for instance. “Galaxy Digital is newly listed [on Nasdaq], but [it still] needs consistent profitability,” said Kennard. “Marathon Digital, Riot Platforms and Strategy are often cited but may be a little early in their journey.”
Lau didn’t expect any crypto-native companies to join the S&P 500 anytime soon, though it could happen in the next two to three years, he said. Rhoads ventured, “I would not go as far as stating this is the beginning of multiple crypto-related firms joining the S&P 500, as the new members often replace a firm in same industry — in this case, COIN replaced Discover Financial.”
Strategy (MSTR) is a possible candidate. It easily has the necessary market capitalization, but it’s struggling to meet the index’s earnings requirements. “I don’t see MSTR making the cut,” said Kim.
“I’m not sure who would be next — even Gemini (still private) seems far off based on valuations from their last funding rounds,” Kim continued. “It’s really tough to make it into the S&P 500, and so we’ll likely see existing S&P 500 firms increasingly adopt blockchain/crypto services before we see a true-blue crypto firm — i.e., one that started as a crypto firm — enter the index.”
Time will tell, but for now, “I’m not aware of any crypto-linked companies with sufficient market cap and consistent earnings that meet SPX criteria,” concluded Sosnick.
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