According to Matthew Sigel, head of digital assets research at VanEck, the financial services and digital payments giant Block Inc. may soon become the first business in the S&P 500 with a Bitcoin (BTC) investment plan.
While firms like Tesla currently own Bitcoin, Sigel argues that Block’s planned and recurrent BTC accumulation distinguishes it as a pioneer in incorporating Bitcoin into its financial strategy.
How Block Inc. stands out
Block Inc. is a strong contender for the S&P 500 as it allocates 10% of its monthly Bitcoin gross income to BTC investments, giving Block Inc. an edge over companies like Tesla.
Block is also a core participant in the Bitcoin market, holding 8,363 BTC, which equals $775 million. According to BitcoinTreasuries.Net data, the Block’s Bitcoin holdings makes it the eighth-largest corporate holder of the leading crypto.
Criteria for S&P 500 inclusion
Sigel went on to share insights on X regarding the criteria companies need to meet for S&P 500 inclusion. Here are the six key requirements:
Market cap: Company’s capitalization should exceed $18 billion.
Public float: At least 10% of shares must be publicly available.
Earning: The most recent quarter’s earnings and the sum of the previous four quarters’ GAAP earnings must be positive.
Liquidation: The company must display high liquidity.
IPO Seasoning: The company must have been publicly traded for at least 12 months.
US Domicile: The company must have its headquarters in the U.S.
Block met the criteria after the first quarter of 2024. Companies that fulfill all of these standards have been listed in the index within three to 21 months, with the S&P Committee making the final decision.
According to Matthew Sigel, the S&P Index Committee prioritizes sector diversification. Coinbase is another company that also meets the standards. However, it might face increased scrutiny because of its ‘pure-play crypto exposure’. In this case, Block Inc. appears to be a safer and more conventional option for inclusion.
What makes S&P inclusion important?
S&P 500 inclusion is among the core goals of a company that aims to become a leading player in the market. It indicates financial stability, strong market performance, and synchronization with larger economic trends. Investors benefit from increased exposure and credibility as S&P 500 index funds and ETFs purchase the company’s stock.
Block’s prospective inclusion will not only improve its credibility as a financial pioneer, but it will also mark a watershed moment for Bitcoin’s entrance into mainstream financial markets.
Block Inc.’s potential inclusion into the S&P 500 index comes as MicroStrategy, a software firm that has been aggressively accumulating BTC since 2022, recently made it into the Nasdaq index.
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