Source: Cointelegraph.com NewsThis past week, Coinbase joined the S&P 500, one of the world\u2019s most elite stock indexes \u2014 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.\u00a0
\nBut this attainment is not about one company alone.\u00a0
\n\u201cThis is more than an achievement for Coinbase; it\u2019s a landmark for the broader crypto and blockchain industry,\u201d said Meryem Habibi, chief revenue officer of Bitpace. Coinbase joining the S&P 500 doesn\u2019t just boost the owner of the largest US cryptocurrency exchange. \u201cIt cements the legitimacy of an entire asset class,\u201d she told Cointelegraph.\u00a0
\nJason 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 \u201cthe most iconic benchmark index\u201d in global markets, adding:
\nIt sends a strong signal to institutional investors: Crypto infrastructure has matured into a credible, systemic part of the financial ecosystem.
\nIt is a milestone event, Steve Sosnick, chief strategist at Interactive Brokers, told Cointelegraph, \u201cbecause 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.\u201d Indeed, Coinbase could now get billions of dollars in passive investor flows just from becoming part of the S&P 500.\u00a0
\n\u201cWhat\u2019s 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,\u201d Benchmark analyst Mark Palmer told CNBC.\u00a0
\n\u201cThis normalizes crypto exposure in conservative portfolios that might otherwise avoid digital assets\u201d and brings with it indirect adoption by institutional investors, retirement plans and sovereign funds that has broader industry significance, added Habibi.
\nStill, 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\u2019s Kelley School of Business Indianapolis, told Cointelegraph. \u201cIt 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.\u201d\u00a0
\nSeparately, Coinbase also reported a data breach last week, a \u201ccompromise of passwords or private keys\u201d that could eventually cost the crypto exchange $180 million to $400 million.
\nThe 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.
\nRelated: Violent crypto robberies on the rise: Six attacks that targeted investors
\nMeanwhile, inclusion in the S&P 500 means that \u201cindex funds, including those managed by BlackRock, Vanguard and State Street, must now allocate capital to Coinbase,\u201d Habibi told Cointelegraph. \u201cThis means billions of dollars in passive investment will flow into a crypto-native business.\u201d\u00a0
\n$10 billion in new capital inflows?
\nHow much money could flow Coinbase\u2019s 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.
\nIf Coinbase gets only a 0.1% weighting \u2014 a share that Habibi thinks reasonable \u2014 it could reap $10 billion in potential capital flows without a single investor actively choosing crypto exposure.
\nS&P Dow Jones Indices Annual Survey of Assets. Source: S&P GlobalInstitutional acceptance is arguably the bigger story here, Habibi continued. Coinbase\u2019s 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:
\nThe move paves the way for other crypto firms \u2014 e.g., Circle, Chainalysis, Fireblocks \u2014 to aim for public listings and eventual index inclusion, potentially triggering a new wave of institutional-grade crypto finance companies.
\nIt may be premature to speak yet about a convergence of the crypto and TradFi economic sectors, however, as some are doing. \u201cCrypto, overall, is still a very small fraction of the overall economy,\u201d Seoyoung Kim, associate professor of finance at Santa Clara University, told Cointelegraph. \u201cI think the greater convergence coming ahead will be increasing institutional adoption of blockchain-based protocols and tokenization.\u201d<\/p>\n
A convergence of economies?
\nOthers disagree. \u201cWe have been talking about TradFi-crypto convergence for quite some time,\u201d Owen Lau, executive director at Oppenheimer & Co, told Cointelegraph. \u201cIt is happening and will continue to happen. Robinhood\/Bitstamp, Kraken\/Ninja Trader and Ripple\/Hidden Road are good examples.\u201d
\n\u201cWe\u2019re not quite at full convergence, but we\u2019re definitely past the separation phase,\u201d opined Kennard. He, too, referenced crypto ETFs but also pointed to recent events, like Galaxy Digital\u2019s listing on the Nasdaq exchange this month and Coinbase\u2019s role as custodian for multiple ETFs, demonstrating that TradFi firms are now looking to crypto-native firms for some infrastructure needs. \u201cRegulatory clarity is still emerging, but institutional rails are being laid fast,\u201d said Kennard.
\nMore equity listings mean that crypto companies can tap markets as a source of liquidity, but that doesn\u2019t necessarily involve a convergence of financial channels, stated Interactive Brokers\u2019 Sosnick. \u201cConvergence will occur when a traditional finance company truly adopts crypto as a means of payment.\u201d\u00a0
\nRelated: Senate stablecoin vote splits Democrats amid concerns over corruption
\nStill, Habibi pointed to convergence in infrastructure solutions, like JPMorgan\u2019s Onyx platform that is being used to settle billions in intraday repo transactions using blockchain technology, Nasdaq\u2019s digital asset custody infrastructure launch and PayPal\u2019s launch of its PayPal USD (PYUSD) stablecoin, which integrates crypto rails and consumer fintech.
\n\u201cThese 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,\u201d Habibi explained.<\/p>\n
Who is next? Source: Cointelegraph.com NewsThis past week, Coinbase joined the S&P 500, one of the world\u2019s most elite stock indexes \u2014 a triumph for the crypto firm, which spent much of the… <\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[5],"tags":[],"_links":{"self":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts\/129923"}],"collection":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=129923"}],"version-history":[{"count":0,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts\/129923\/revisions"}],"wp:attachment":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=129923"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=129923"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=129923"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nNow that Coinbase has broken ground, should one expect other crypto firms to gain S&P 500 inclusion soon? Maybe not.\u00a0
\nA 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. \u201cGalaxy Digital is newly listed [on Nasdaq], but [it still] needs consistent profitability,\u201d said Kennard. \u201cMarathon Digital, Riot Platforms and Strategy are often cited but may be a little early in their journey.\u201d\u00a0
\nLau didn\u2019t 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, \u201cI 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 \u2014 in this case, COIN replaced Discover Financial.\u201d
\nStrategy (MSTR) is a possible candidate. It easily has the necessary market capitalization, but it\u2019s struggling to meet the index\u2019s earnings requirements. \u201cI don\u2019t see MSTR making the cut,\u201d said Kim.
\n\u201cI\u2019m not sure who would be next \u2014 even Gemini (still private) seems far off based on valuations from their last funding rounds,\u201d Kim continued. \u201cIt\u2019s really tough to make it into the S&P 500, and so we\u2019ll likely see existing S&P 500 firms increasingly adopt blockchain\/crypto services before we see a true-blue crypto firm \u2014 i.e., one that started as a crypto firm \u2014 enter the index.\u201d
\nTime will tell, but for now, \u201cI\u2019m not aware of any crypto-linked companies with sufficient market cap and consistent earnings that meet SPX criteria,\u201d concluded Sosnick.
\nMagazine: TradFi is building Ethereum L2s to tokenize trillions in RWAs: Inside story\u00a0Read More<\/a><\/p>","protected":false},"excerpt":{"rendered":"