MSCI Adopts New Rules, Puts Strategy and Crypto Treasury Firms at Index Exclusion Risk

Global index provider MSCI has adopted new rules that could lead to the removal of Strategy, Metaplanet, and Upexi from its widely tracked global indexes. The methodology, finalized on Thursday, targets companies classified as 'non-operating,' a move that could reshape passive investment portfolios holding firms with substantial digital asset treasuries.

Under the new framework, MSCI will assess companies based on their operating assets and a set of five financial ratios. Firms failing at least four of these five tests could be deemed ineligible for inclusion in the MSCI Global Investable Market Indexes. For existing constituents, the screening process must be failed over two annual reporting periods before a potential removal.

Strategy (MSTR), known for its significant Bitcoin holdings, was previously identified by MSCI as a candidate for deletion under this 'non-operating companies methodology.' Metaplanet and Upexi also face potential exclusion. Additionally, Sharplink, Inc (SBET), Ton Strategy Company (TONX), Solana Company (HSDT), and DeFi Development Corp. (DFDV) are among those placed on a 'watchlist' for potential future removal.

Why it matters

The potential removal from MSCI indexes carries significant implications for the affected companies. Funds that track MSCI indexes, such as exchange-traded funds (ETFs) and mutual funds, would be compelled to sell their holdings in these companies. This forced selling could exert downward pressure on stock prices and diminish passive investment demand, which is a crucial component of liquidity and valuation for many publicly traded firms.

Conner Brown, executive director of the Bitcoin Policy Institute, highlighted the broader consequences of such exclusions in September. He stated that it "removes a company from the default portfolios of tens of millions of people who never chose to remove it," using Strategy as a prime example of a company facing such a scenario.

While this specific methodology is new, the potential impact has been a topic of discussion. JPMorgan analysts, in an earlier estimate concerning a different MSCI digital asset proposal, projected that Strategy's exclusion from MSCI indexes could trigger approximately $2.8 billion in selling. It is important to note that this estimate pertained to a prior proposal, not the rules officially adopted on Thursday.

Strategy, for its part, opposed the changes when they were proposed in August. However, the company also sought to downplay the potential disruption. It noted that funds tracking MSCI’s Global Investable Market Indexes collectively hold around 13 million of its shares, representing 3.1% of its basic shares outstanding. Strategy argued that these holdings amount to less than one day’s typical trading volume, suggesting a limited market impact.

What to watch

Investors will be closely watching MSCI's official announcement of the final list of companies slated for removal. This list is scheduled for release on November 11. Any deletions will take effect later that month, specifically on November 30, 2026. The market's reaction to the definitive list and the subsequent trading activity in the affected shares will provide further insight into the true impact of MSCI's new 'non-operating company' rules.