Executive warns exclusion of digital asset treasuries could force index-tracking funds to sell, affecting top crypto-heavy companies.
Digital asset treasury (DAT) companies may face significant market pressure if the MSCI Index decides to exclude firms holding over 50% of their assets in crypto. The index, which tracks major equities for institutional investors, began consulting the investment community in October to determine whether companies with crypto-heavy balance sheets remain suitable for inclusion.
Potential Exclusion and Market Implications
Charlie Sherry, Head of Finance at Australian crypto exchange BTC Markets, commented that the odds of exclusion are high, noting that MSCI typically consults only when it is leaning toward a decision. The consultation runs until December 31, with results expected January 15, and any changes coming into effect in February.
“If MSCI excludes DATs, index-tracking funds would need to sell, and that alone creates meaningful pressure on the affected names,” Sherry said.
Currently, MSCI is evaluating at least 38 crypto companies, including MicroStrategy, Sharplink Gaming, Riot Platforms, and Marathon Digital Holdings. Analysts warn that such a move could significantly affect valuations. For example, JPMorgan noted MicroStrategy could potentially shed $2.8 billion if the exclusion proceeds, with roughly $9 billion of its market value tied to passive funds tracked by indexes.
Sherry explained that MSCI’s methodology focuses on balance-sheet assets rather than operational fundamentals, treating crypto-heavy holdings as outside traditional equity benchmarks. This reflects a broader shift toward more conservative evaluation frameworks in capital markets, moving away from the previous era of applauding crypto-heavy corporate strategies.
38 crypto companies that could be affected by its decision. : MSCI
Wider Market Considerations
It remains uncertain whether other index providers would follow MSCI’s lead. Sherry emphasized that index providers often monitor each other, but each uses its own methodology and client base. For instance, MicroStrategy remains on track for possible inclusion in the S&P 500, showing precedent for varied approaches.
Despite short-term disruptions, Sherry notes that clearer rules ultimately benefit the crypto market, providing transparency and reducing uncertainty for both issuers and institutional investors.
“Well-defined frameworks tend to strengthen long-term institutional confidence, even if the short-term impact is uncomfortable for stocks built around Bitcoin holdings,” he added.
$MSTR – JPM says MicroStrategy "at risk of exclusion from major equity indices as the January MSCI decision approaches."
"With MSCI now considering removing MicroStrategy and other digital asset treasury companies from its equity indices…outflows could amount to $2.8bn if… pic.twitter.com/gMqlYtcZII
The MSCI decision highlights the increasing scrutiny of crypto-heavy corporate balance sheets and the growing importance of regulatory and index frameworks. Exclusion could force large-scale adjustments in institutional holdings, but clearer rules may ultimately enhance stability and confidence in the evolving digital asset ecosystem.
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.
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