Coinbase in S&P 500, which crypto companies are the most likely candidates?

Last week, Coinbase joined the S&P 500, one of the world’s most elite stock indices, marking a triumph for the crypto company that has spent much of the 2020s battling U.S. government agencies like the SEC and CFTC for its survival. But this achievement is not just about one company.

– This is more than an achievement for Coinbase. It is a milestone for the broader crypto and blockchain industry, said Meryem Habibi, Chief Revenue Officer of Bitpace.

Coinbase’s inclusion in the S&P 500 index not only boosts the owner of the largest U.S. cryptocurrency exchange but also solidifies the legitimacy of the entire asset class. Jason Kennard, Head of Business Development at ARK Invest Europe, stated that for the first time, a crypto-native company has met the stringent profitability, liquidity, and market capitalization requirements of the most recognized benchmark index in global markets, adding that this move sends a strong signal to institutional investors: crypto infrastructure has matured into a credible, systemic part of the financial ecosystem.

This is a milestone event, said Steve Sosnick, Chief Strategist at Interactive Brokers, because whether they like it or not, know it or not, equity investors buying S&P 500 index funds will now have crypto exposure through COIN. 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. This means that billions of dollars in passive investments will flow into the crypto-native business. Still, it was only a matter of time before some crypto company entered the S&P 500 index, as the industry becomes increasingly important to the global financial system.

10 billion dollars in new capital inflows?

How much money could flow into Coinbase’s shares? Passive investing (e.g., investing in an ETF that reflects the S&P 500) has surged in recent years. S&P DJII estimated in 2024 that approximately 10 trillion dollars now passively track the S&P 500. If Coinbase receives a weight of just 0.1 percent, a share considered reasonable, it could reap 10 billion dollars in potential capital flows without a single investor actively choosing exposure to the crypto company.

Institutional acceptance is likely the bigger story. Coinbase’s inclusion in the index signals that public markets now reward not only growth but also compliance with laws, operational maturity, and long-term vision in the crypto space. This move paves the way for other crypto companies. Circle, Chainalysis, Fireblocks are targeting public listings and eventual inclusion in the index, potentially sparking a new wave of institutional-level crypto financial companies. However, it may be too early to speak of the convergence of crypto and TradFi economic sectors, as some do. Crypto is, overall, still a very small part of the total economy.

Who’s next?

Now that Coinbase has taken a big step, should we expect other crypto companies to soon be included in the S&P 500? Maybe not. Joining the S&P 500 requires a large market capitalization, but that alone is not enough. There are other criteria as well. For example, a candidate must be profitable in the last year and quarter to qualify. Galaxy Digital was recently listed on Nasdaq, but still needs consistent profitability. Marathon Digital, Riot Platforms, and Strategy are often mentioned, but they still have a long way to go.

Strategy is a possible candidate. It has the necessary market capitalization but struggles to meet earnings requirements. Even Gemini, which is still privately owned by the Winklevoss twins, seems far off based on estimates from their latest funding rounds. Time will tell, but for now, analysts do not see any crypto-related company with sufficient market capitalization and consistent earnings that meet the criteria.