[NEW YORK] Coinbase Global, the largest US cryptocurrency exchange, will be added to the S&P 500 Index in the latest milestone for the booming digital asset industry.
The company will replace Discover Financial Services in the index prior to the start of trading on May 19, S&P Dow Jones Indices said in a press release. Shares of Coinbase were up 13 per cent in after-hours trading.
The inclusion of Coinbase is viewed as a vindication by crypto faithfuls who helped US President Donald Trump win the election in November.
“It’s a sign of the times,” said Dan Dolev, senior payments analyst at Mizuho. “It’s the welcoming of crypto stocks to the mainstream.”
The addition comes after Capital One Financial received approval from US regulators to buy Discover Financial Services, a deal that creates the nation’s biggest credit-card issuer by loan volume.
“This is a strong signal that digital assets are moving firmly into the financial mainstream,” said David Schassler, the head of multi-asset solutions for investment manager VanEck. “This reflects a broader shift in how traditional markets are beginning to recognise and integrate crypto infrastructure.”
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After becoming the first major US crypto company to be listed on an exchange almost four years ago through a direct listing, shares of Coinbase jumped some 260 per cent in the past two years, valuing the company at roughly US$53 billion. Those gains belie a roller-coaster ride for investors following a series of scandals hitting the sector and bankruptcies such as the collapse of the FTX exchange in 2022.
More recently, the stock slumped almost 17 per cent this year, weighed down by lacklustre earnings and in contrast to an almost 10 per cent gain for Bitcoin.
The company in the first quarter saw its revenue increase about 24 per cent from the year-ago period, though it was around 10 per cent sequentially lower from the fourth quarter. Meanwhile, net income fell 94 per cent to US$66 million. Much of the decline was due to Coinbase marking its crypto holdings to market price.
Coinbase also announced plans to acquire Deribit, the world’s largest exchange for Bitcoin and Ether options, for US$2.9 billion, marking one of the most significant acquisitions in the crypto industry’s history and coming as Donald Trump’s return to the White House sparks a wave of deal-making among crypto companies.
The president has appointed digital-asset advocates to key government positions and enacted policies benefiting the industry, including dropping various enforcement actions.
“You are seeing all these crypto-related SEC cases being dropped very rapidly. And so it’s a very conducive environment for these things,” said Mizuho’s Dolev, referring to the Securities and Exchange Commission. “There’s no sense of urgency to go and start over-regulating because it seems like you have a very friendly administration.”
Companies must have a market capitalisation of at least US$20.5 billion and meet profitability, liquidity and share-float standards to qualify for the S&P 500, per March’s methodology.
Inclusion in the US equity benchmark can elevate a company’s profile and is becoming more important as passive investment funds grow. Expulsion from the benchmark can weigh on stock prices, as index funds sell shares to realign with the S&P 500’s new composition.
In the March quarterly rebalancing, DoorDash, Williams-Sonoma, TKO Group Holdings and Expand Energy were added to the S&P 500. BLOOMBERG
