According to Matthew Sigel, the head of digital assets research at VanEck, Block, the financial services and digital payments company, is on track to potentially become the first company with a clear Bitcoin strategy to join the S&P 500.
Sigel explained that there are several criteria that a company must meet to be added to the index, which tracks the largest 500 companies in the U.S. by market capitalization. These criteria include having a market cap over $18 billion, a public float of at least 10%, positive earnings in the most recent quarter, and positive GAAP earnings over the last four quarters. Additionally, the company must have high liquidity, have been public for more than 12 months, and be based in the U.S.
Sigel stated that Block is expected to meet the earnings criteria by the first quarter of 2024. However, he noted that S&P 500 inclusion is not solely based on a formula and is ultimately decided by the Index Committee.
Sigel highlighted that companies that meet these criteria have historically been included in the index within three to 21 months. He compared Block to Tesla, stating that while Tesla holds Bitcoin, it does not have a specific Bitcoin strategy like Block, which allocates 10% of its monthly Bitcoin profits to Bitcoin investment on a recurring basis.
Although Coinbase also meets the criteria, Sigel suggested that it could be a more controversial choice for the committee due to its focus on the crypto industry. He also mentioned that the S&P 500’s efforts to diversify could lead to the inclusion of more financial firms, as financial companies currently make up approximately 14% of the index.