MSCI Adopts New Index Exclusion Rules Impacting Crypto Treasury Firms
New methodology targets non-operating companies, potentially triggering significant stock sell-offs for listed entities.
1New MSCI Index Methodology
MSCI has officially adopted a new methodology to exclude non-operating companies from its Global Investable Market Indexes. This policy change, proposed in August, specifically targets firms that fail to meet defined operational criteria. The final list of companies facing removal will be announced on November 11, with changes taking effect on November 30, 2026.
2Targeted Companies and Watchlist
Strategy, Metaplanet, and Upexi were previously identified as candidates for deletion under these new rules. Additionally, firms such as Sharplink, Ton Strategy Company, Solana Company, and DeFi Development Corp. have been placed on a watchlist. These entities face potential removal if they fail to meet the updated operational standards set by the index provider.
3Operational Assessment Criteria
The new screening process evaluates companies based on their operating assets and five specific financial ratios. To be deemed ineligible, a company must fail at least four of these five tests. Existing index constituents are generally granted a grace period, requiring them to fail the screening process over two consecutive annual reporting periods before removal.
4Market Impact of Exclusion
Removal from MSCI indexes forces funds tracking these benchmarks to divest from the affected companies. This mandatory selling can exert downward pressure on stock prices and significantly reduce passive investment demand. Conner Brown of the Bitcoin Policy Institute noted this process removes companies from default portfolios held by millions of investors who never actively chose exclusion.
5Financial Selling Estimates
JPMorgan analysts previously estimated that Strategy’s exclusion could trigger approximately $2.8 billion in selling activity. While this estimate was based on an earlier digital asset proposal rather than the final rules adopted this Thursday, it highlights the potential scale of capital outflows associated with index rebalancing for companies with significant crypto-related treasury holdings.
6Corporate Response to Changes
Strategy has formally opposed these methodology changes while simultaneously downplaying the potential for market disruption. The company reported that funds tracking MSCI’s Global Investable Market Indexes hold approximately 13 million shares, representing 3.1% of its basic shares outstanding. Management stated these holdings amount to less than one full day of the company's total trading volume.
7Treasury Strategy Context
The regulatory focus on these firms stems from their unique business models, which prioritize large-scale crypto asset holdings. Strategy, for instance, recently added 250 Bitcoin to its balance sheet, bringing its total holdings to 848,250 BTC. This accumulation strategy is central to why these firms are being scrutinized under the new non-operating company classification rules.
8Implications for Passive Investing
The shift underscores the tension between traditional index providers and companies adopting aggressive crypto-treasury strategies. As MSCI finalizes its list in November, the market will observe how passive funds adjust their portfolios. This development marks a critical juncture for institutional investors who rely on index-based products to maintain exposure to diverse global equity markets.