MSCI has finalized a rule change that could remove Bitcoin treasury companies from its widely tracked equity indexes, potentially cutting off a significant source of passive investment demand for their shares.
In an announcement dated Oct. 15, the index provider said it will treat non-operating companies as ineligible for inclusion in the MSCI Global Investable Market Indexes. The change takes effect at the close of Nov. 30 as part of MSCI's November index review.
How the Rule Works
The new methodology screens for corporate issuers that lack substantial operating assets and behave more like passive investment vehicles than real businesses. Companies that fail an initial core screen are then evaluated using an exclusion test based on five financial ratios. A stock is flagged as ineligible if it trips four or more of them.
To limit index churn, MSCI built in buffers: current index constituents will only be removed if they fail the screen in each of their two most recent annual filing periods. New additions are blocked if they fail in either of the last two.
Target Companies
The rule is aimed at firms whose balance sheets are dominated by a single asset, a model pioneered by Strategy, which holds hundreds of thousands of Bitcoin, and adopted by Japan's Metaplanet and other firms following the same strategy.
MSCI said it will publish the final list of affected companies on Nov. 11.
End of Temporary Reprieve
The decision ends a temporary reprieve that MSCI implemented last year as the crypto-treasury trend grew. MSCI had frozen certain index adjustments for companies whose digital-asset holdings made up 50% or more of their total assets. That interim measure is now being scrapped, with all such firms assessed under the new rules.
Potential Impact
Removal from major MSCI indexes would force funds that track them to sell the affected shares, potentially pressuring stock prices and shrinking the premium these companies have traded at over the value of their holdings.
The threat has already prompted defensive actions. Metaplanet recently sold 10,000 Bitcoin and bought back 11,000 to demonstrate active treasury management, while Strategy has continued accumulating Bitcoin.
