Potential index exclusions raise concerns over market pressure and fair company classification
Proposed changes to index rules by Morgan Stanley Capital International (MSCI) could lead to up to $15 billion in forced crypto selling, according to industry analysts. The concern centers on whether companies holding large portions of their balance sheets in digital assets should remain eligible for inclusion in major MSCI indexes.
MSCI indexes act as key benchmarks for passive investment funds, determining which stocks institutional investors are required to hold. If crypto treasury companies are excluded, index-tracking funds would be forced to sell shares, potentially triggering large-scale liquidations of both equities and underlying crypto assets.
Industry estimates suggest outflows between $10 billion and $15 billion, based on a preliminary list of 39 affected companies with a combined $113 billion in float-adjusted market capitalization. Analysts place more precise projections at $11.6 billion in total outflows.
Strategy Faces the Largest Impact
One firm, Strategy, accounts for 74.5% of the impacted float-adjusted market cap. Analysts estimate it could experience $2.8 billion in outflows if removed from MSCI indexes, highlighting how concentrated the potential impact could be.
Debate Over Balance Sheet Metrics
Critics argue that judging companies solely by balance sheet composition is flawed. They contend that holding crypto assets does not change a company’s customers, revenue streams, or operational business model.
MSCI is expected to release its final decision by January 15, with any approved changes potentially taking effect during the February 2026 index review. The outcome could have lasting implications for crypto markets and institutional investment flows.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.