S&P Pantera Crypto Index Excludes Bitcoin and XRP

S&P Dow Jones Indices and Pantera Capital have launched a new crypto benchmark that excludes both Bitcoin and XRP, prioritizing protocols that generate and distribute revenue to token holders [1]. The index, which tracks 18 assets including Ethereum, Solana, and Hyperliquid, marks a shift toward applying traditional equity-style earnings tests to digital assets [1, 2].

The revenue-based exclusion

The S&P Pantera Digital Asset Index requires protocols to demonstrate consecutive quarters of positive revenue, a portion of which must be returned to token holders through mechanisms like buybacks, burns, or direct distributions [1]. While Bitcoin and XRP are among the most widely held assets, they failed to meet these criteria [1]. Bitcoin’s transaction fees are paid to miners rather than token holders, and the network does not generate protocol revenue in the manner defined by the index [1, 2].

XRP was similarly excluded despite the XRP Ledger’s fee-burn mechanism. S&P noted that the total value of XRP burned since 2012—approximately $16 million—represents less than 1% of the $3 billion in annual revenue generated by the 18 qualifying index members [1]. Furthermore, the index requires that revenue reaches token holders; in the case of XRP, fees are primarily directed toward Ripple and the financial institutions utilizing the network [1].

Institutional implications

The index is designed as a proxy for institutional investors to track "economically productive" cryptocurrencies [2]. By curating assets based on protocol revenue, the benchmark aims to filter out speculative projects, potentially signaling higher quality to institutional allocators [2]. While no exchange-traded fund (ETF) currently tracks the index, Pantera Capital has initiated discussions with asset managers regarding potential products [1].

The exclusion has had no immediate impact on market prices, as both Bitcoin and XRP remained flat following the announcement, with traders appearing more focused on geopolitical tensions between the U.S. and Iran [1]. For Bitcoin, the exclusion aligns with its established "digital gold" narrative, which does not rely on dividend-like payouts [1]. For XRP, however, the omission challenges its core value proposition of utility, as the index specifically measures the economic activity the project claims to provide [1].

What to watch

• ETF Filings: Monitor for any formal filings from asset managers to launch an ETF tracking the S&P Pantera Digital Asset Index, which would provide a direct mechanism for institutional capital inflows [1, 2].
• Index Rebalancing: The index is scheduled to rebalance quarterly, which will adjust the weightings of the 18 constituents based on their market value and revenue performance [1].
• Protocol Revenue Trends: Watch for changes in how major networks route transaction fees, as protocols may adjust their tokenomics to meet the index's revenue-sharing requirements in future periods [1, 2].

Whether this benchmark becomes a standard for institutional crypto exposure depends on the successful launch of tracking products and the continued adoption of the index’s revenue-based methodology by the broader market. The index remains a reference tool for now, leaving the question of whether it will influence long-term capital flows to be answered by future institutional adoption [1, 2].