Bitcoin Think Tank BPI Questions MSCI’s Methodology Over New Index Exclusion Rules

Background of MSCI’s Exclusion Proposal

In early 2024, MSCI introduced a proposal aimed at excluding digital asset treasury companies — firms carrying cryptocurrency holdings — from its global market indexes starting in 2025. The plan met with pushback from market participants, leading MSCI to shelve the crypto-specific policy in January and broaden its review to encompass a wider category of "non-operating companies."

On August 3rd, MSCI returned with an expanded proposal that could still remove companies like Strategy and Metaplanet from its indexes. The new approach involves evaluating whether companies maintain substantial operating assets and whether they generate revenue from ongoing business operations by applying five additional financial tests.

BPI’s Investigation and Criticism

The Bitcoin Policy Institute (BPI) published a paper titled “Wall Street’s Invisible Committee,” revealing metadata indicating that the initial presentation behind MSCI’s consultation was stored in an internal folder specifically created for digital asset treasury companies. This suggested continuity from MSCI’s initial crypto-focused exclusion efforts.

BPI challenged MSCI’s reliance on the concept of “operating assets,” highlighting that this term lacks a standardized definition in U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). This ambiguity potentially grants MSCI discretionary power in classifying diverse asset types such as cash, investments, ongoing construction projects, or strategic holdings.

BPI also warned that the approach could have unintended consequences beyond crypto firms. Capital-intensive industries like mining or satellite networks—which may hold large asset values and rely on external financing for years before generating revenue—could be impacted by MSCI’s methodology.

Potential Market and Corporate Implications

If MSCI proceeds to exclude ‘‘non-operating companies’’ from its indexes, index-tracking funds could be forced to divest shares in affected firms, including Strategy and Metaplanet, causing significant capital outflows. JPMorgan analysts previously estimated possible outflows for Strategy of around $2.8 billion upon exclusion.

Another company cited for potential exclusion is uranium investment firm Yellow Cake, highlighting the broad market impact of such criteria on asset-heavy firms.

MSCI is currently soliciting feedback until September 30, 2024, with results and final decisions expected on or before October 16. Any approved changes are set to be implemented in the November 2026 Index Review.