MSCI has finalized a rule change that could remove Bitcoin treasury companies from its widely tracked equity indexes, putting Michael Saylor’s Strategy at risk and potentially cutting off a meaningful source of passive investment demand for the stock.
In an Oct. 15 announcement, MSCI said it will treat “non-operating companies” as ineligible for inclusion in the MSCI Global Investable Market Indexes. The change formalizes a proposal first floated in August, with minor modifications, and will take effect at the close of Nov. 30 as part of MSCI’s November index review.
How the new screen works
Under the updated methodology, MSCI will screen for corporate issuers that lack substantial operating assets and behave more like passive investment vehicles than operating businesses. Companies that do not pass an initial core screen will then go through an exclusion test built around five financial ratios.
A stock will be flagged as ineligible if it triggers four or more of those five ratios.
Bitcoin treasury firms are in focus
The rule is aimed at companies whose balance sheets are dominated by a single asset. That model was pioneered by Saylor’s Strategy, which holds hundreds of thousands of Bitcoin, and has also been adopted by Japan’s Metaplanet and a growing list of imitators.
The decision also ends a temporary reprieve. Last year, as the crypto-treasury trend accelerated, MSCI froze certain index adjustments for companies whose digital-asset holdings accounted for 50% or more of total assets. That interim approach will now be scrapped, and all such firms will be assessed under the new framework.
Buffers built in to reduce index churn
MSCI included buffers to limit turnover in its indexes. Existing constituents will be removed only if they fail the screen in each of their two most recent annual filing periods. New additions, by contrast, will be blocked if they fail in either of the last two filing periods.
MSCI said it will publish the final list of affected companies on Nov. 11.
Saylor objects to the policy
According to the report, Saylor urged MSCI to abandon what he called a “discriminatory” rule that would delete Strategy from its benchmarks.
Removal from major MSCI indexes would force funds that track those benchmarks to sell the affected shares. That could pressure stock prices and shrink the premium at which these companies have often traded relative to the value of their crypto holdings.
Companies have already started responding
The threat has prompted defensive moves. Metaplanet recently sold 10,000 Bitcoin and bought back 11,000 in an effort to show active treasury management. Strategy, on the other hand, has continued to accumulate Bitcoin even as the index question remains unresolved.