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
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.
Related: Violent crypto robberies on the rise: Six attacks that targeted investors
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.
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…
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