Last week, Coinbase joined the S&P 500, one of the most elite stock market indices in the world – a triumph for cryptographic society, which spent a large part of the 2020s to fight against American government agencies such as the dry and future commercial commission for its survival.
But this achievement does not concern a single company.
“It is more than an achievement for Coinbase; it is a benchmark for the wider industry of cryptography and blockchain,” said Meryem Habibi, Bitpace income chief. Coinbase joining the S&P 500 not only stimulates the owner of the greatest American cryptocurrency exchange. “This cements the legitimacy of an entire asset class,” she told Cintelegraph.
Jason Kennard, head of commercial development at Ark Invest Europe, told Cintelegraph that for the first time, a crypto-native company had satisfied the strict profitability, liquidity and market capitalization requirements of “the most emblematic reference index” in the world markets, adding:
It sends a strong signal to institutional investors: cryptographic infrastructure has matured a credible and systemic part of the financial ecosystem.
This is a striking event, Steve Sosnick, chief strategist at Interactive Brokers, told Cintelegraph: “Because they wish or not, or not or not, investors in shares that buy S&P 500 index funds will now have cryptographic exposure via the play.” Indeed, Coinbase could now obtain billions of dollars in passive investors flows simply by being part of the S&P 500.
“What is remarkable is that a few months ago, the company was engaged in an intense legal battle with the SEC, which invited that its platform was illegal because it was the trafficking of unregistered titles”, the reference analyst Mark Palmer said CNBC.
“This normalizes exposure to cryptography in conservative portfolios which could otherwise avoid digital assets” and provides indirect adoption by institutional investors, retirement plans and sovereign funds which have a broader meaning of the industry, added habit.
However, it was just a matter of time before a few The Crypto company is said to be introduced into the S&P 500 group Russell Rhoads, an associate professor of financial management at the University of Indiana at the Kelley School of Business in Indianapolis, told Cintelegraph. “It is logical that corner or another company linked to cryptography is in the index, because industry becomes more important for the global economy and you want the constituents of the S&P 500 to be representative of the economy.”
Separately, coinbase also reported A violation of data last week, a “compromise of passwords or private keys” which could possibly cost $ 400 million in the exchange of crypto at $ 400 million.
The hack exposed personal information of tens of thousands of users and left it vulnerable In flights and kidnappages, as we can see in the wake of the violation of the 2021 register.
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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 in Coinbase,” Habibi at Cointelegraph told. “This means that billions of dollars in passive investments will take place in a native cryptographic company.”
10 billion dollars of new capital entries?
How much money could flow the Coinbase path? Passive investment (for example, investing in an ETF which reflects the S&P 500) has proliferated in recent years. S&P Djii estimated In 2024, around 10 billions of dollars now passively follow the S&P 500.
If Coinbase receives only 0.1% weighting – a part that Habibi thinks reasonable – it could harvest $ 10 billion in potential capital flows without a single investor actively chooses cryptographic exposure.
Institutional acceptance is undoubtedly the biggest story here, continued Habibi. The inclusion of Coinbase in the index indicates that public procurement now rewards not only growth, but also regulatory compliance, operational maturity and long -term vision in cryptographic space. She added:
This decision opens the way to other cryptographic companies – for example, circle, analysis chain, fiery objects – to target public lists and the possible inclusion of the index, potentially triggering a new wave of financing companies of institutional quality cryptography.
It may be premature to speak again about a convergence of the economic and tradfi economic sectors, as some do. “The crypto, on the whole, is still a very small fraction of the global economy,” said Seoyoung Kim, an associate finance professor at the University of Santa Clara. “I think that the greatest convergence that goes from the front will be an increasing institutional adoption of protocols and tokenization based on the blockchain.”
A convergence of economies?
Others do not agree. “We have been talking about the Tradfi-Crypto convergence for some time,” said Owen Lau, executive director of Oppenheimer & Co, at Cointelegraph. “This happens and will continue to happen. Robinhood / Bitstamp, Kraken / Ninja Trader and Ripple / Hidden Road are good examples. ”
“We are not entirely at full convergence, but we have definitively exceeded the separation phase,” said Kennard. He also referred to ETF Crypto, but also underlined recent events, such as the Galaxy Digital list on the Nasdaq Exchange this month and the role of Coinbase as a goalkeeper for several ETFs, demonstrating that Tradfi companies are now turning to cryptographic companies for certain infrastructure needs. “Regulatory clarity is still emerging, but institutional rails are being posted,” said Kennard.
Other announcements on actions mean that cryptographic companies can exploit markets as a source of liquidity, but that does not necessarily imply a convergence of financial channels, said Sosnick of interactive brokers. “Convergence will occur when a traditional financing company will really adopt crypto as a means of payment.”
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However, Habibi underlined the convergence in infrastructure solutions, such as the JPMorgan Onyx platform which is used to settle billions of intraday repo transactions using Blockchain technology, the launch of the NASDAQ digital asset infrastructure and the launch of Paypal USD (Pyusd), Consumer Fintocon, which integrated Crypto Rails and Consummer Fintoch.
“These examples underline a change in which crypto and tradfi are no longer competing but co-evolved. Crypto-native companies are starting to look like traditional financial institutions in the structure, while banks adopt decentralized technologies to improve efficiency, reduce the friction of regulations and develop a range of assets, “said Habibi.
Who is the next one?
Now that Coinbase has inaugurated, should we expect other cryptographic companies to soon gain S&P 500 inclusion? Maybe not.
Large market capitalization is necessary to reach the S&P 500, but that alone is not enough. There are other criteria. A candidate must have been profitable in the past year and quarter to qualify, for example. “Galaxy Digital is recently listed (on Nasdaq), but (he still has) need coherent profitability,” said Kennard. “The digital marathon, the platforms and the riot strategy are often cited but can be a little early on their trip.”
Lau did not expect cryptocurrency companies to join the S&P 500 anytime soon, although this could happen in the next two to three years, he said. Rhoads has ventured: “I would not go until the start of several companies related to cryptography joining the S&P 500, because new members often replace a business in the same industry – in this case, Coin has replaced Discover Financial.”
The strategy (MSTR) is a possible candidate. It easily has the necessary market capitalization, but it has trouble meeting the requirements for the benefit of the index. “I don’t see MSTR doing the cup,” said Kim.
“I do not know who would be the next – even the Gemini (always private) seem far on the basis of the evaluations of their last series of funding,” continued Kim. “It is really difficult to be part of the S&P 500, and we will therefore probably see the existing S&P 500 companies adopt more and more the Blockchain / Crypto services before seeing a real blue cryptography company – that is to say a company that has started as a cryptographic company – enters the index.”
Time will tell us, but for the moment, “I am not aware of any company linked to cryptography with sufficient market capitalization and coherent income which meets the SPX criteria”, concluded Sosnick.
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