Coinbase (COIN) to Join the S&P 500 Index on 19 May 2025, Replacing Discover Financial Services

Coinbase (Nasdaq: COIN) is set to join the S&P 500 index on 19 May 2025, replacing Discover Financial (NYSE: DFS). The index tracks the largest 500 publicly listed companies in the US across various sectors, including finance, tech, healthcare, and more. Coinbase will be listed under the financials sector.

The cryptocurrency exchange is expected to be a small addition to the index, given its limited size compared to other S&P 500 constituents. However, its inclusion still carries significant weight and could impact both Coinbase and the broader market.

Coinbase shares rose by about 10 per cent following the announcement on Monday after market close. The rally follows a 4 per cent rise earlier in the day due to improving market sentiment as the trade war concerns eased.

The movement of COIN shares in last 1 month (source: Google Finance)

Although Coinbase shares are still down by around 27 per cent over the past six months, they have risen by 17 per cent in the last month (excluding the latest after-market rise).

The S&P 500 is a broad market index that follows 500 large-cap publicly traded companies in the US. It is a benchmark index used to measure the performance of the U.S. stock market.

The index is market-cap-weighted, meaning companies with larger valuations—such as Microsoft (Nasdaq: MSFT), Apple (Nasdaq: AAPL), and Nvidia (NYSE: NVDA)—have a greater impact on the index’s performance. In contrast, smaller constituents, particularly those ranked in the bottom 400 by size, carry significantly less weight. These firms, where Coinbase is likely to be positioned, typically account for just 0.01% to 0.2% of the index each.

Despite their limited individual influence, they collectively support the index’s overall diversification.

Being added to the S&P 500 brings several benefits for any company. The most immediate is an increase in demand for its shares. This happens because all index-tracking funds—such as ETFs and mutual funds—must buy the stock, usually leading to a rise in trading volume and sometimes in the share price.

Coinbase shares are expected to be in high demand as several large institutions will need to purchase them to adjust their portfolios. For instance, the iShares CORE S&P 500 (State Street) ETF has assets under management of over $446 billion and will need to buy Coinbase shares to maintain its holdings in the S&P 500.

Moreover, including Coinbase in their portfolios will require adjustments from numerous other institutions tracking the S&P 500 index. Among the largest is the Vanguard S&P 500 ETF (New York:VOO), boasting over $500 billion in AUM.

Inclusion can also attract more institutional investors. Many funds are restricted to investing only in S&P 500 stocks, so joining the index can draw in longer-term capital and broader investor interest.

The cryptocurrency exchange recently agreed to acquire the crypto options platform Deribit in a $2.9 billion deal. The transaction will include $700 million in cash and 11 million shares of Coinbase Class A common stock.