Next week, a prominent US stock index is set to embrace its first cryptocurrency exchange. Coinbase is officially joining the S&P 500 before trading commences on May 19. This development arrives over three years after the firm’s direct listing on Nasdaq, affirming its place among large-cap companies.

Announcement of S&P 500 Membership

As per S&P Dow Jones Indices, Coinbase will take the place of Discover Financial Services in the index prior to Monday’s market opening. This follows the company’s compliance with stringent requirements, achieving positive earnings in the latest quarter as well as the previous four. This achievement highlights the challenges faced by a company that has experienced extreme fluctuations in relation to cryptocurrency valuations.

Financial Performance Overview

Reports indicate that Coinbase recorded a revenue of $7.4 billion in 2021 but then faced a loss of $1.1 billion in Q2 2022. By Q1 2025, revenue climbed to $2 billion, reflecting a 24% increase compared to the same period last year, despite marking a decline of around 10% from Q4 2024. Net income saw a drastic drop of 94%, hitting $66 million after the firm’s crypto holdings were adjusted to current market values. These figures emphasize the strong connection between Coinbase and major cryptocurrencies like Bitcoin and Ether.

Coinbase has just made history as the inaugural crypto company in the S&P 500.

This milestone aligns with what our dedicated supporters—retail investors, institutional players, and partners—have believed from the outset.

Cryptocurrency is here to stay.

— Brian Armstrong (@brian_armstrong) May 12, 2025

Market Response and Stock Trends

The market has shown a positive reaction, with shares rising over 10% in after-hours trading on Monday, as S&P 500 index funds prepare to incorporate Coinbase into their holdings. In the last two years, the stock has surged approximately 250%, although it’s down about 17% thus far this year, while Bitcoin has risen close to 10%.

Strategic Growth and Industry Influence

Reports indicate that Coinbase is considering acquiring Deribit for $2.9 billion, a significant move in crypto history. This acquisition would introduce options trading to its services and enhance revenue opportunities. However, it also presents integration risks and debt challenges that investors will monitor closely.

Future of Cryptocurrency and Regulations

Analysts assert that the inclusion signifies a growing recognition of digital assets within traditional financial frameworks. Current government attitudes towards crypto companies are increasingly favorable. Competitors like Gemini and Kraken are exploring their own paths to public listings. Nonetheless, the volatility of token values may still lead to fluctuations in Coinbase’s earnings, potentially affecting its status within the S&P 500.

This moment marks a pivotal change for Coinbase and the wider cryptocurrency landscape. As index funds invest into its stock, the exchange is likely to gain heightened attention from mainstream investors. However, the company must carefully balance growth strategies—such as the Deribit deal—with the inherent risks associated with the volatile nature of cryptocurrencies.

Featured image from StartupNews.fyi, chart from TradingView