Coinbase (COIN) Will Be Added to the S&P 500 Index on May 19

COIN will be added to the S&P 500 Index on May 18 in place of Discover Financial Services DFS, which is being taken over by Capital One Financial.

Coinbase Global Inc (NASDAQ:COIN) is set to join the S&P 500 Index on Friday, May 19, replacing Discover Financial Services Inc (NYSE:DFS), which is being taken over by Capital One Financial Corp (NYSE:COF). After the news broke on Monday, Coinbase shares advanced more than 27%.

This marks the first time a digital-asset firm will be included in the top U.S. large-cap benchmark, signaling a major breakthrough toward the cryptocurrency sector’s inclusion in mainstream finance. For the investors, the move presents the ideal time to tap into exposure by way of ETFs that hold significant stakes in the crypto exchange.

ETFs In Focus

First Trust SkyBridge Crypto Industry & Digital Economy ETF (NYSE:CRPT)

This ETF from First Trust (NASDAQ:FTIV) is designed to provide investors with an opportunity to invest in the emerging industry of cryptocurrency and digital assets. The fund tracks the performance of the SkyBridge Crypto Industry & Digital Economy Index, which is comprised of 20–25 stocks that are engaged in the development, production, and distribution of cryptocurrency-related products and services, or those involved in the digital economy.

The second-largest holding is Coinbase, with a 17.5% allocation. It carries an expense ratio of 0.85%. The fund shot up more than 7% this week.

Fidelity Crypto Industry and Digital Payments ETF (NASDAQ:FDIG)

This ETF from Fidelity (NYSE:FDL) seeks to provide investment in the U.S. equity market with a primary focus on companies that are engaged in the crypto industry and digital payments sector. It tracks the performance of the Fidelity Crypto Industry and Digital Payments Index.

The leading position is held by Coinbase with a 12.5% portfolio share. It charges a 0.40% expense ratio. The fund gained more than 8% this week.

YieldMax Crypto Industry & Tech Portfolio Option Income ETF (NYSE:LFGY)

For investors seeking a covered call strategy applied to a portfolio of crypto industry and technology stocks and technology for monthly income, this ETF from Shapeshift BioTech (NYSE:SSFT) might be of interest. It aims to generate income and provide capital appreciation.

The fund has a broad focus on companies operating in the crypto and technology sectors, and it adopts a covered call strategy with this segment. It holds notable positions in Block (NYSE:SQ), Intuit Inc (NASDAQ:INTU), and Payoneer Inc (NASDAQ:PAYN).

This ETF has an expense ratio of 0.99% and is on track for a 2.5% gain this week.

What’s Next

Coinbase’s inclusion in the S&P 500 will open it up to a huge new investor base — the passive funds that track the benchmark index. As these funds now rebalance to accommodate COIN, analysts believe billions will pour into the stock.

Bernstein analysts estimate that the S&P 500 funds will need to buy as much as $16 billion of Coinbase shares to include the company in their portfolios. They add that the majority of this capital will come from passive index-tracking vehicles.

Moreover, Coinbase is reportedly in talks to buy Deribit, a crypto derivatives exchange based in Dubai, for $2.9 billion.

If agreed, the transaction would be the biggest in crypto history and massively expand Coinbase's presence in international crypto derivatives markets. Deribit is currently the world’s largest trading venue for Bitcoin options in terms of both volume and open interest.

Coinbase’s inclusion in the top S&P 500 is less symbolic and more a game-changer for the mainstream visibility and institutional adoption of crypto-related firms. Investors who want to capitalize on this trend can consider investing in ETFs with significant exposure to Coinbase. These ETFs are also diversified and easily accessible.

As legacy finance continues to integrate digital assets, Coinbase's journey could herald a new dawn, not only for crypto but also for the ETF landscape that spins around it.