There is a change coming to the S&P 500, starting next Monday, out goes Discover Financial Services — the credit card company is being acquired by Capital One — and in goes Coinbase, the crypto trading platform with a market capitalization upwards of $60 billion.
American University law professor Hilary Allen has published several papers on the threats cryptocurrencies pose to the financial system. She’s testified before Congress in favor of stronger crypto regulation.
But just like millions of other Americans, she also has money in an index fund that tracks the S&P 500, which means soon, she’ll own Coinbase stock.
“Oh, now this is profoundly uncomfortable,” said Allen. “Yes, yes I will. Hilary Allen, Coinbase shareholder, does not have a ring to it.”
Coinbase is the first crypto company to join the S&P 500, alongside Apple and Berkshire Hathaway.
Allen said that stamp of legitimacy is dangerous for a business that relies on such famously volatile assets.
“What this signals to me is that the integration of crypto and traditional finance, which is something I’ve been warning against for years, is coming closer and closer to fruition,” said Allen.
For crypto enthusiasts, though, that’s kind of the whole point.
“There’s some validation here. We have Coinbase’s inclusion in the S&P reinforces the idea that crypto isn’t just a niche market,” said Kristin Smith, who heads the crypto advocacy group Blockchain Association.
It was just four months ago that Coinbase was the target of a major Securities and Exchange Commission lawsuit, which the Trump administration dropped.
Smith said of this latest milestone: “I’m not sure if it would have happened if Trump hadn’t been elected.”
At its core, Coinbase is a website where people go to buy and sell crypto, very similar to what Sam Bankman-Fried’s defunct FTX used to do — which sounds worrying.
But crypto defenders will point out that unlike FTX, Coinbase is subject to U.S. regulations.
Bruno Caratori at the crypto company Hashdex said at this point, the FTX scandal is kind of a distant memory.
“I don’t think I’ve heard about FTX in a long while. Now, I think the general optimism in crypto has has returned,” said Caratori.
Coinbase did not respond to an interview request.
