Wall Street Meets Web3: Fintech ETFs, SPY, VOO To Get Jack Dorsey Upgrade As Block Joins S&P 500

Jack Dorsey’s Block Inc (NYSE:XYZ) has officially entered the big leagues, and index-tracking ETFs such as SPDR S&P 500 ETF TRUST (NYSE:SPY) and Vanguard S&P 500 ETF (NYSE:VOO) are coming along for the ride.

Stocks of the fintech titan famous for its Square point-of-sale machines and Cash App, rose by almost 8% in regular trading on Monday morning following news that the firm would be included in the S&P 500 index. The addition, effective before Wednesday’s market open, is a milestone event for Block and a disruption for S&P 500-tracking ETFs.

Block will take the place of Hess Corp (NYSE:HES), which is being taken over by oil behemoth Chevron Corp (NYSE:CVX), in the S&P 500 roster.

Also Read: Block Stock Is Soaring Monday: What’s Going On?

Why ETFs Such As SPY & VOO Matter

The headline action doesn’t only concern Block shareholders; it could have spillover effects on passive ETFs such as the SPY and VOO, which must now include millions of Block shares to remain representative of the index. Index-tracking funds will have to purchase about 54.2 million shares of Block to replicate its new weight, which may lead to short-term increased demand, according to JPMorgan, cited by Reuters.

For ETF investors, that would mean:

• SPY and VOO will now provide exposure to Block, a firm sitting at the intersection of fintech and crypto.
• Passive flows to Block could hold the stock’s price up in the short term, as index tracking funds such as SPY and VOO rush (out of compulsion) to buy shares to match the index.
• Fintech as a theme might become more visible and gain mainstream acceptance among institutional and retail portfolios both.

Fintech ETFs Also Get A Halo Effect

While the S&P 500 addition is the major headline, Block’s bump could also find its way into thematic fintech ETFs that already have substantial exposure to the firm. Names such as:

ARK Fintech Innovation ETF (BATS:ARKF), which is up more than 1.2% Monday.

Global X FinTech ETF (NASDAQ:FINX), which is up more than 1.3%

Amplify Transformational Data Sharing ETF (NYSE:BLOK), which is up almost 3%.

These funds have held Block as a top-10 holding for a long time. These ETFs now hold a company with increased institutional influence, and potentially improved liquidity and valuation tailwinds.

A Fintech Moment Of Coming Of Age

Block’s ascension is representative of a wider trend: digital payments, peer-to-peer lending and borrowing, and crypto solutions are no longer niche gambles. With a market cap of almost $49 billion and holdings ranging from traditional payments to Bitcoin custody and point-of-sale software, Block is an all-in-one destination for the new world of digital finance.

And the timing couldn’t be better. President Donald Trump just signed into law a regulation of U.S. dollar-pegged stablecoins, a development that is likely to legitimize further and expand crypto-based payments, precisely Block’s domain.

Also Read: Trump Wishes Bitcoin, Ethereum, XRP ‘Happy Crypto Week!’ — ‘It Is All Part Of Make America Great Again’

Bottom Line

For ETF buyers, Block entering the S&P 500 is a reminder to review fintech exposure, be it through core vehicles such as SPY and VOO, or through more focused plays such as ARKF and FINX.

Because when the benchmark changes, so does the play-by-play (of the fintech game).

Read Next:

• The ETF-Mutual Fund Mashup Is Almost Legal—And Portfolios May Never Look the Same

Photo: Sergei Elagin via Shutterstock