Rule to Exclude Non-Operating Companies

November List Finalized, Changes Take Effect at Month-End

Removal Could Spur Outflows From Index-Tracking Funds

Strategy, Metaplanet and other companies with large Bitcoin holdings are at risk of being removed from MSCI indexes. The threat follows MSCI's adoption of a new standard designed to screen out companies whose profile is driven more by asset holdings than by operating businesses. If the removals are confirmed, selling by index-tracking funds could weigh on their shares.

Global index provider MSCI said on Oct. 15 that it had adopted rules restricting non-operating companies from inclusion in its Global Investable Market Indexes, or GIMI. The changes revise a proposal first presented in August and will apply starting with the November index review. The final list of deletions will be released on Nov. 11, with the changes taking effect after the market close on Nov. 30.

In an advance impact analysis published by MSCI, Strategy, Metaplanet and Upexi were identified as deletion candidates. SharpLink, TON Strategy, Solana Company and DeFi Development were placed on a watch list for possible future removal.

Under the new rule, MSCI first checks whether a company holds sufficient operating assets. Companies that fail that test are then assessed using five financial ratios. If they meet the exclusion threshold on four or more of those measures, they lose eligibility for index inclusion. The framework does not judge companies solely by the share of crypto assets they hold.

MSCI built in a buffer for companies already in the indexes. In principle, a company would be removed only if it met the exclusion criteria in each of its two most recent annual reporting periods. MSCI may also use the latest interim financial statements if needed.

What the market is watching is the movement of index-tracking money. Passive funds hold stocks to mirror index composition rather than a company's growth outlook. If a stock is removed, those funds may have to cut positions or sell out entirely, leaving the company exposed to selling pressure and a weaker demand base.

JPMorgan previously estimated that Strategy could see about $2.8 billion of outflows if it is removed from MSCI indexes. That estimate, however, was based on an earlier MSCI proposal related to digital-asset companies.

The change could also create indirect pressure on the Bitcoin market. Strategy buys Bitcoin with money raised through common stock and preferred share issuance. The company said on Oct. 12 that it had used $21 million in proceeds from common stock sales to purchase Bitcoin. Given that structure, a lower share price and tougher funding conditions after index removal could reduce its capacity for additional purchases. That would weaken demand from one of the market's major corporate buyers.

Strategy has argued that the impact of any removal would be limited. In comments submitted to MSCI in August opposing the proposal, the company said funds tracking the relevant indexes held about 13 million of its shares, or 3.1% of its basic shares outstanding. It said that amount was smaller than its average daily trading volume.

The company also challenged the classification itself. Strategy said it reports its Bitcoin business as an operating segment under U.S. accounting standards and that treating it as a non-operating company is unfair. It added that MSCI was effectively reviving a previously withdrawn proposal to exclude digital-asset companies under a different standard.