MSCI Implements Index Exclusion Rules That Could Remove Strategy and Other Crypto Firms
Index provider MSCI has adopted new exclusion rules that could remove companies like Strategy, Metaplanet, and Upexi from its global indexes, while several other crypto treasury firms face potential delisting. The updated methodology targets "non-operating companies," potentially impacting funds tracking MSCI indexes and placing downward pressure on affected stocks.
Adoption of New Exclusion Criteria and Companies at Risk
On Thursday, MSCI announced the adoption of a methodology proposed in August, which renders "non-operating companies" ineligible for inclusion in MSCI Global Investable Market Indexes. Strategy (ticker MSTR) has already been identified for removal under this methodology. Other firms like Sharplink, Inc (SBET), Ton Strategy Company (TONX), Solana Company (HSDT), and DeFi Development Corp. (DFDV) have been placed on a watchlist for potential exclusion.
This regulatory expansion focuses on excluding companies that fail to meet MSCI's definition of operational activity, emphasizing the presence of operating assets and financial metrics.
Evaluation Process and Implementation Timeline
MSCI will assess companies based on operating assets and five financial ratios, with ineligibility assigned if a company fails at least four of the five tests. Existing index members must fail the screening process during two consecutive annual reporting periods to warrant removal.
The final list of excluded companies is scheduled for release on November 11, with changes effective from November 30, 2026.
Market Impact and Stakeholder Perspectives
Removal from MSCI indexes could compel funds tracking those benchmarks to liquidate affected shares, leading to downward pressure on stock prices and diminished passive investment demand.
JPMorgan analysts previously estimated that Strategy's exclusion could trigger roughly $2.8 billion in sales; however, this forecast related to earlier MSCI proposals distinct from the current rules.
In August, Strategy opposed the changes but minimized the disruption by noting funds tracking MSCI's Global Investable Market Indexes held approximately 13 million shares, representing 3.1% of its basic shares outstanding — a quantity less than one day's trading volume.
Expert Commentary
Conner Brown, Executive Director of the Bitcoin Policy Institute, highlighted the implications of broad-market index exclusion, explaining it effectively removes companies from the default portfolios of millions of investors without their direct consent.
Therefore, MSCI's new rules reflect an effort to improve index quality and transparency but simultaneously pose significant challenges to companies operating with unconventional business models prevalent in the crypto industry.
Why it matters
MSCI’s adoption of new exclusion rules marks a significant development for companies holding crypto-related assets on their balance sheets. The methodology aims to enhance index quality by excluding non-operating firms, shifting the investment landscape for players like Strategy and others. This can result in forced selling and heightened volatility, while simultaneously altering passive fund strategies worldwide. Consequently, this event directly affects liquidity and share prices of crypto-related companies and bears on institutional investor confidence globally.
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