The moment index funds held Coinbase, Wall Street had tightened the reins around the neck of crypto freedom

On May 19, 2025, the last 30 seconds before the opening of the New York Stock Exchange. The trading terminals for the S&P 500 index funds flashed red signals—hundreds of millions of dollars surged into the stock pool of Coinbase (COIN). Fund managers, expressionless, tapped away at their keyboards, indifferent to the philosophical ideals of Bitcoin, unaware of the technological revolution of blockchain, and many had never even owned a wallet address. But they knew one thing: index rules required them to hold Coinbase, as it had now become the new darling of the S&P 500. Thus, the capital machine of Wall Street silently tightened the reins around the neck of crypto freedom.

1. The Path to Compliance: From Regulatory Hell to Financial Sanctuary

Coinbase's compliance comeback can be described as a bloody epic. Three years ago, the company was struggling for survival amidst a storm of lawsuits from the SEC. In June 2023, the SEC filed a lawsuit against it with 13 charges of violating federal securities laws, accusing it of trading "unregistered securities." CEO Brian Armstrong angrily declared on social media, "If it's a lawsuit, we are ready!"

A dramatic turnaround occurred in 2025. In February, the SEC suddenly withdrew its lawsuit, and the Trump administration appointed a crypto-friendly lawyer to lead the SEC, reversing the regulatory winds by 180 degrees. Three months later, Coinbase acquired the derivatives giant Deribit for a staggering $2.9 billion, controlling 70% of the global Bitcoin options open interest. When the doors of the S&P 500 opened on May 19, Coinbase had transformed from a regulatory outcast into a financial elite.

2. The Dark War of Capital: The Reconstruction Equation of Passive Funds

According to estimates by Oppenheimer analysts, over $15 trillion in index funds were forced to build positions, with short-term passive buying demand reaching as high as $9 billion. More profound impacts were surging beneath the surface:

• 269 million American pension holders "unconsciously held coins" through 401K accounts, with 5 million teachers becoming indirect participants in the crypto economy;
• The logic of stock price fluctuations was restructured: passive allocation formed a buffer, partially hedging against the severe volatility of the crypto market;
• Expansion of Wall Street's pricing power: after acquiring Deribit, Coinbase controlled the Bitcoin options market, with capital penetrating the core of crypto asset pricing;

This forced bundling is changing market behavior. Data from Robinhood shows a 300% surge in COIN search volume, yet only 12% of users understand its business essence. As ordinary people's pension accounts become tied to COIN's stock price, the free volatility characteristic of the crypto market is being tamed by Wall Street's stable demand.

3. The Twilight of Freedom: The Institutional Survival of Crypto Spirit

The crypto community once cheered for Coinbase's inclusion in the S&P 500, but the astute have sensed a crisis. When Michael Saylor celebrated on X that this was "an important milestone for Bitcoin," he omitted the underlying implication: the financialization of Bitcoin is essentially the incorporation of traditional capital.

The Long and Short Game After Coinbase's Inclusion in the S&P 500

• Bullish Logic Chain

Regulatory amnesty → Index inclusion → Institutional accumulation → Liquidity premium → Acceleration of industry ETFs

• Bearish Warning Line

Compliance costs → Innovation suppression → User loss → Decoupling of valuation from the crypto market → Intensified manipulation by Wall Street

The real threat lies at the level of values. When the "do no evil" spirit of crypto encounters the pressure of quarterly earnings, Coinbase begins to delist anonymous coins and restrict access to DeFi. The acquisition of Deribit is essentially a takeover of the derivatives market using centralized exchange logic, which runs counter to Satoshi Nakamoto's vision of a peer-to-peer electronic cash system.