Coinbase Joins S&P 500, Stock Jumps 8.8%

Coinbase, the largest U.S.-based cryptocurrency exchange, has made history by becoming the first crypto company to be included in the S&P 500. This significant milestone was announced on May 12 and will take effect on May 19. Coinbase will replace Discover Financial Services, which was recently acquired by Capital One. Following the announcement, Coinbase's stock (COIN) saw an 8.8% increase in after-hours trading.

Founded in 2012, Coinbase has been listed on the Nasdaq since 2021. Despite a challenging year for cryptocurrency stocks, the company reported a net income of $65.6 million for the first quarter of 2025. This consistent profitability makes Coinbase eligible for inclusion in the S&P 500, which requires companies to demonstrate sustained earnings. Additionally, Coinbase's revenue climbed 24% year-over-year to $2.03 billion.

Coinbase CEO Brian Armstrong celebrated the achievement on X, stating, “Crypto is here to stay.” The company also posted a humorous tweet referencing the journey of acceptance for cryptocurrencies, culminating in their inclusion in the S&P 500. This inclusion is expected to boost Coinbase's exposure, as index-tracking funds will need to purchase its shares. Coinbase now joins other industry giants like Apple and Nvidia in the benchmark index.

Coinbase is anticipated to be in the lower tier of the index, with a weighting between 0.01% and 0.2%. This milestone signifies a turning point for digital assets, as Coinbase now shares S&P 500 status with fellow Bitcoin holders Tesla and Block. Notably, Strategy is absent from the index due to a $4.2 billion net loss in the first quarter of 2025.

Coinbase's addition to the S&P 500 underscores the company's growth and stability in the volatile cryptocurrency market. The inclusion requires positive earnings in the most recent quarter and the sum of the prior four quarters. Coinbase's earnings have fluctuated due to market volatility, with strong revenue of $7.4 billion in 2021 and a loss of $1.1 billion in the second quarter of 2022. However, the exchange reported $527 million in adjusted net income for the first quarter of 2025, with total revenue of $2 billion, down from $2.3 billion in the fourth quarter of 2024.

The regulatory environment for cryptocurrencies has become more permissive, benefiting Coinbase and encouraging several rival exchanges, including Bullish, Gemini, and Kraken, to consider going public. Additionally, Coinbase recently agreed to acquire crypto derivatives exchange Deribit in a $2.9 billion deal, further expanding its growing derivatives division. Derivatives trading makes up a far greater percentage of total crypto volumes than spot markets, which Coinbase dominates in the U.S.

Other firms listed in the S&P 500, including Block, PayPal, and Visa, provide crypto services. However, MicroStrategy, which holds billions of dollars worth of bitcoins, is not included in the S&P 500 due to its smaller market capitalization. Coinbase's inclusion in the S&P 500 is a significant step forward for the cryptocurrency industry, validating the growing acceptance and legitimacy of digital assets in the mainstream financial market.