MSCI's New Rules Target Crypto Treasury Firms; Strategy, Metaplanet, and Upexi at Risk

Original | Odaily Planet Daily (@OdailyChina)

Author | Asher (@Asher_0210)

On October 15, MSCI announced the adoption of a new screening framework for "non-operating companies," using metrics such as operating assets, operating expenses, and cash flow to determine whether certain listed companies more closely resemble investment vehicles. The related adjustments will take effect with the November index review, with the final list of affected companies to be published on November 11 and implemented after market close on November 30.

In short, MSCI’s new rule proposes removing from global indices companies that appear more like investment vehicles than businesses with actual operations; Strategy, Metaplanet, and Upexi—all cryptocurrency treasury companies—are on the potential deletion list.

Compared to last year’s discussions centered on the proportion of digital asset holdings, the new framework expands its review to include different asset classes. For crypto treasury companies, the debate has shifted from “how many tokens to hold” to a more fundamental question: Does accumulating assets through financing constitute sufficient business substance?

In 2025, MSCI proposed excluding treasury companies with digital assets accounting for 50% or more of total assets from the Global Investable Market Index (GIMI). However, in January of this year, MSCI decided to temporarily hold off on implementing this exclusion and instead study a broader category of “non-operating companies.”

The related companies remain in the index but are subject to temporary restrictions, including a freeze on adjustments to the index calculation shares and inclusion factors, as well as a hold on new inclusions and scale tier migrations. Therefore, last year’s “digital assets accounting for 50%” was not an automatically enforced deletion threshold.

Today, the new framework will replace these interim measures. MSCI no longer evaluates companies solely based on their proportion of digital assets, but instead reviews their overall financial structure, regardless of whether they hold crypto assets or traditional investment assets.

If a company exists in the form of a publicly listed corporation but its value growth primarily stems from holding assets and their price appreciation, should it still be considered an operating business? MSCI’s new guidelines aim to provide a quantitative framework to clarify this boundary.

The core of MSCI's new framework is to first examine the asset structure, then assess the business and sources of funding.

The first step is "core screening," which assesses whether a company has sufficient operating assets. According to the MSCI consultation document, companies with operating assets accounting for more than 50% of total assets pass this step; those that do not meet this threshold proceed to the next screening stage.

The second step focuses on five financial metrics: first, operating assets, to assess how much of the company’s assets are genuinely used for business operations; second, operating expenses, to determine whether there is appropriate spending aligned with the scale of assets; third, operating cash flow, to observe whether the business generates cash; fourth, fair value changes, to evaluate whether financial performance is primarily driven by fluctuations in the prices of held assets; and fifth, reliance on external financing, to examine whether the company primarily accumulates assets through financing.

Companies that fail the core screening will be deemed ineligible for inclusion if at least four of the five criteria trigger exclusion conditions.

However, failing to pass the screening in a single period does not mean existing constituents will be immediately removed. MSCI has implemented a buffer mechanism: existing constituents are only removed if they fail to pass the screening in two consecutive annual review periods; non-constituents lose eligibility for inclusion if they fail to pass in any one of the two most recent annual review periods. MSCI may also refer to the latest interim submission data.

This means that retaining a small amount of software or hotel business may not be sufficient to maintain index eligibility; holding a large amount of crypto assets will not automatically trigger removal. The key consideration is the significance of the business activity within the company’s overall financial structure and whether the non-compliance persists.

A total of five potential delistings have been disclosed. Three are related to crypto treasuries: Strategy and Metaplanet, which hold Bitcoin, and Upexi, which focuses primarily on SOL treasury; the other two are uranium investment company Yellow Cake and Icelandic investment holding company Skel fjárfestingafélag.

The watchlist has expanded to 17 companies, including digital asset treasury-related firms such as SharpLink, SUI Group Holdings, TON Strategy, and Solana Company.

The two lists correspond to different risk stages. The potential deletion list is still pending final review and confirmation in November; companies on the watch list have not yet met the deletion criteria and may only be removed if they continue to fail subsequent screenings.

Index eligibility directly affects passive fund allocation. After a company is removed, funds tracking the relevant index must adjust their holdings, potentially creating concentrated selling pressure.

Due to its large size, Strategy has become a focal point of market attention. J.P. Morgan previously estimated that if removed by MSCI, Strategy could face approximately $2.8 billion in outflows; if other major index providers follow suit, the scale could rise to about $8.8 billion. Strategy, however, emphasized that funds tracking the MSCI GIMI hold approximately 13 million shares of MSTR, representing 3.1% of the basic shares outstanding, or roughly 60% of its 30-day average daily volume, and believes the related adjustments will not have a material impact on itself.

However, trading volume cannot be directly equated to the ability to absorb net selling pressure. For treasury companies, a longer-term concern is: will index exits compress valuation premiums and thereby reduce the efficiency of leveraged coin purchases?

Such companies typically raise capital by issuing stocks, bonds, or preferred shares, then use the funds to purchase crypto assets. When common stock trades at a high premium relative to net asset value, issuing stock to buy crypto more effectively increases assets per share; as the premium narrows, the same amount of funding requires issuing more shares, leading to greater dilution for existing shareholders.

Therefore, the impact of the new regulations extends beyond how much stock to sell during rebalancing; it also concerns whether the treasury company can continue to secure financing under favorable terms. If there is a greater shift toward debt or preferred shares, additional interest, dividend payments, and repayment pressures must be borne.

The disagreement between the treasury company and MSCI lies in whether financing, holding assets, and issuing financial products constitute substantive business activities.

Strategy believes the company is not merely passively holding Bitcoin, but is actively engaging in financing and financial products based on it. The company emphasizes that its Bitcoin business has been disclosed as an operating segment under U.S. GAAP, and accuses MSCI of repackaging its previous exclusion policy for digital asset treasury companies with a new framework.

Saylor also told Bloomberg that the relevant index tracks a limited amount of capital, so excluding Strategy would have minimal impact. However, he questioned MSCI’s differential treatment of various assets: “Oil, natural gas, land, and machinery are all considered capital, but Bitcoin is not.” In his view, this reflects bias against Bitcoin.

However, according to MSCI’s screening criteria, engaging in these activities does not automatically qualify a company for index inclusion. If a company’s assets are still primarily investment holdings, its financial performance continues to fluctuate with asset prices, and its growth relies on external financing, it may still be classified as a non-operational company—even if it consistently engages in trading and securities issuance.

Metaplanet attempted to demonstrate its treasury management capabilities through actual transactions, selling 10,000 BTC in the third quarter and subsequently purchasing 11,000 BTC, stating that the move was intended to showcase Bitcoin’s liquidity and ability to cover interest-bearing debt.

However, liquidity is not the same as operational performance. Selling coins to obtain cash does not mean the core business can consistently generate cash; buying more Bitcoin also does not necessarily change the structure where assets are primarily held for investment and growth relies on financing. Therefore, actively buying and selling assets alone is not sufficient to pass scrutiny—what matters is how these activities are reflected in financial metrics.

MSCI's new rules will not directly end the treasury model, but they may weaken index fund support for this model. The final list in November will determine which companies are removed from the index; in the longer term, if the valuation premium narrows, treasury companies will need to demonstrate that they can still continue to increase book value per common share, even as the efficiency of financing coin purchases declines.