Digital asset treasury firms may face considerable pressure if MSCI decides to remove them from its index in January, an analyst warned. According to insights provided to Cointelegraph, if the MSCI Index proceeds with the exclusion, index-tracking funds would have to divest in response.
The MSCI Index announced its consideration of potentially excluding Bitcoin (BTC) and other digital asset treasury companies (DATs) holding more than 50% in crypto assets during October. Feedback indicates that DATs could mimic traits of investment funds, thus making them ineligible for index inclusion.
Charlie Sherry, the Head of Finance at Australian crypto exchange BTC Markets, expressed his belief that the likelihood of exclusion is “solidly in favour”. This means that a consultation protocol is underway until December 31, with results to be disclosed on January 15. Changes would take effect in February.
If the exclusion occurs, Sherry noted that index-tracking funds would need to undertake sales, which could significantly pressure the affected companies directly.
A preliminary list includes 38 crypto firms under MSCI’s scrutiny, such as Michael Saylor’s Strategy and miners Riot Platforms and Marathon Digital Holdings.
According to Sherry,
“When most of the value comes from a balance-sheet asset rather than the underlying business, MSCI treats that as outside the scope of a traditional equity benchmark.”
He reflected on the implications:
“This indicates a shift from last year’s view, where crypto-driven corporate strategies were celebrated as innovative. Currently, prominent index providers are tightening definitions, reflecting a market retreat to withhold a more conservative view.”
A Wednesday note from JPMorgan analysts alerted that Saylor’s Strategy could lose $2.8 billion, with nearly $9 billion of its estimated $56 billion market value tied to passive funds governed by index tracking.
Sherry highlighted that it’s uncertain how MSCI’s moves might influence other index providers, noting that although they often observe one another’s actions, they don’t always align, as demonstrated by S&P’s stance on MicroStrategy.
As a positive outcome, Sherry stated that clearer rules result in better understanding for companies regarding their treasury decisions, ultimately reducing uncertainty for both issuers and buyers.
“Well-defined frameworks tend to strengthen long-term institutional confidence, even if the short-term impacts could be troubling for stocks associated with Bitcoin holdings.”
For more information on related topics, such as Bitcoin acquisitions, read about Strategy’s recent Bitcoin purchases.
