Under new MSCI rules, listed companies that look “more like investment vehicles than bona fide businesses” could be kicked out of global indices. Strategy $MSTR and Japan’s Metaplanet are both potential candidates. Funds tracking MSCI hold about 13 million MSTR shares, or 3.1% of its total shares outstanding, and could be forced to sell if it is actually removed.
But MSCI’s new rules don’t target crypto treasury companies specifically; they target companies that don’t look like bona fide businesses.
On October 15, MSCI finalized its framework for non-operating companies. The final list will be announced on November 11, and the changes will take effect at market close on November 30. Strategy (MSTR) and Japan’s Metaplanet are currently on the simulated deletion list.
First, it’s important to be clear: MSCI isn’t directly banning crypto treasury companies. It’s introducing a new set of criteria. First, it looks at whether operating assets account for more than half of a company’s assets. If they don’t, it then assesses five financial ratios: operating asset intensity, expense intensity, operating cash flow, fair value change intensity, and capital dependence. Fail four or more, and the company is out. Existing constituents must fail for two consecutive review periods before they are actually deleted.
Once these rules are implemented, almost every company that has turned its balance sheet into a “crypto treasury” will be affected. Strategy is essentially a leveraged Bitcoin holding vehicle; its software business has long since become irrelevant. The same goes for Metaplanet. MSCI is using its index rules to distinguish operating companies from companies focused on treasury management.
The impact has three layers:
1. The first is passive funds. Thirteen million shares is no small amount. JPMorgan previously estimated that MSCI-linked funds alone could sell around $2.8 billion worth. But concentrated selling is entirely different from ordinary trading. If other indices follow suit, the pressure will be even greater.
2. The second is the financing model. Strategy’s core approach is to keep issuing shares and debt to buy crypto, using its share price premium to sustain the cycle. If it is removed from major indices, passive buying will weaken, the premium will shrink, and financing costs will rise. That’s what could really do serious damage, affecting both financing costs and its ability to raise money by issuing shares.
3. The third is the narrative. The market has long treated MSTR as a leveraged Bitcoin ETF. Being removed from an index would amount to an official message to everyone: this is more like an investment vehicle than an operating company. The valuation anchor would shift from crypto treasury companies toward non-operating companies.
There will obviously be a short-term shock, but don’t rush to conclusions.
Existing constituents have a grace period, and the final list hasn’t been released yet. The chance of actual removal is not low, but the timeline gives the market time to absorb the news. More importantly, Bitcoin’s price itself is the real driver of MSTR. Index removal is a frictional cost, not a destruction of value.
The more important question now is: after it’s removed, who will still pay a premium for it with real money?
At its core, this is about index providers redrawing the lines. Who qualifies to be included among bona fide companies, and who has to stay in the basket of alternative investment vehicles? MSCI’s rules make one thing clear: a company’s large market capitalization alone doesn’t guarantee inclusion.
I think the real variable isn’t the rules themselves, but whether investors will reprice these companies once the rules take effect. For MicroStrategy at this stage, however, the company’s market cap is still slightly below the value of its Bitcoin holdings. If this news had come during a period of a high premium, it could have dealt a significant blow by wiping out that premium. But MicroStrategy’s market cap is now itself driven by Bitcoin, so the impact is less significant.
But MSCI’s new rules don’t target crypto treasury companies specifically; they target companies that don’t look like bona fide businesses.
On October 15, MSCI finalized its framework for non-operating companies. The final list will be announced on November 11, and the changes will take effect at market close on November 30. Strategy (MSTR) and Japan’s Metaplanet are currently on the simulated deletion list.
First, it’s important to be clear: MSCI isn’t directly banning crypto treasury companies. It’s introducing a new set of criteria. First, it looks at whether operating assets account for more than half of a company’s assets. If they don’t, it then assesses five financial ratios: operating asset intensity, expense intensity, operating cash flow, fair value change intensity, and capital dependence. Fail four or more, and the company is out. Existing constituents must fail for two consecutive review periods before they are actually deleted.
Once these rules are implemented, almost every company that has turned its balance sheet into a “crypto treasury” will be affected. Strategy is essentially a leveraged Bitcoin holding vehicle; its software business has long since become irrelevant. The same goes for Metaplanet. MSCI is using its index rules to distinguish operating companies from companies focused on treasury management.
The impact has three layers:
1. The first is passive funds. Thirteen million shares is no small amount. JPMorgan previously estimated that MSCI-linked funds alone could sell around $2.8 billion worth. But concentrated selling is entirely different from ordinary trading. If other indices follow suit, the pressure will be even greater.
2. The second is the financing model. Strategy’s core approach is to keep issuing shares and debt to buy crypto, using its share price premium to sustain the cycle. If it is removed from major indices, passive buying will weaken, the premium will shrink, and financing costs will rise. That’s what could really do serious damage, affecting both financing costs and its ability to raise money by issuing shares.
3. The third is the narrative. The market has long treated MSTR as a leveraged Bitcoin ETF. Being removed from an index would amount to an official message to everyone: this is more like an investment vehicle than an operating company. The valuation anchor would shift from crypto treasury companies toward non-operating companies.
There will obviously be a short-term shock, but don’t rush to conclusions.
Existing constituents have a grace period, and the final list hasn’t been released yet. The chance of actual removal is not low, but the timeline gives the market time to absorb the news. More importantly, Bitcoin’s price itself is the real driver of MSTR. Index removal is a frictional cost, not a destruction of value.
The more important question now is: after it’s removed, who will still pay a premium for it with real money?
At its core, this is about index providers redrawing the lines. Who qualifies to be included among bona fide companies, and who has to stay in the basket of alternative investment vehicles? MSCI’s rules make one thing clear: a company’s large market capitalization alone doesn’t guarantee inclusion.
I think the real variable isn’t the rules themselves, but whether investors will reprice these companies once the rules take effect. For MicroStrategy at this stage, however, the company’s market cap is still slightly below the value of its Bitcoin holdings. If this news had come during a period of a high premium, it could have dealt a significant blow by wiping out that premium. But MicroStrategy’s market cap is now itself driven by Bitcoin, so the impact is less significant.