MSCI New Rules Take Effect: Strategy and 4 Other Companies Face Removal, DAT Crisis

Original | Odaily (@OdailyChina)

Author | Asher (@Asher_ 0210)

On October 15, MSCI announced the adoption of a new screening framework for "non-operating companies," which will use indicators such as operating assets, operating expenses, and cash flow to determine whether certain listed companies are closer to investment vehicles. The relevant adjustments will be implemented with the November index review, with the final list of affected companies to be announced on November 11 and to take effect after the close on November 30.

Simply put, the new MSCI rules intend to remove listed companies that "look more like investment vehicles than companies with actual operations" from global indices. Three crypto treasury companies—Strategy, Metaplanet, and Upexi—all appear on the potential deletion list.

Compared with last year's discussion centered on the proportion of digital asset holdings, the new framework expands the scope of review to different asset classes. For crypto treasury companies, the debate has also shifted from "how many tokens they hold" to a more fundamental question: does accumulating assets through financing constitute sufficient operational substance?

The Rules Have Changed: From "Holding More Than 50% in Crypto" to Reviewing Operational Substance

In 2025, MSCI proposed excluding treasury companies whose digital assets accounted for 50% or more of total assets from the Global Investable Market Index (GIMI). However, in January of this year, MSCI decided not to implement this exclusion plan for the time being and instead to study a broader category of "non-operating companies."

The companies concerned were allowed to remain in the index but were still subject to temporary restrictions, including a freeze on index calculation shares and increases in inclusion factors, as well as a suspension of new inclusions and size-tier migrations. Therefore, last year's "digital assets accounting for 50%" was not an automatic deletion threshold that had already been implemented.

Now, the new framework will replace these temporary measures. MSCI will no longer judge solely based on the proportion of digital asset holdings but will review a company's overall financial structure, regardless of whether it holds crypto assets or traditional investment assets.

If a company exists in the form of an ordinary listed company but its value growth mainly comes from the assets it holds and the price appreciation of those assets, should it still be regarded as an operating business? The new MSCI rules attempt to provide a basis for judgment on this boundary through quantitative screening.

Two-Step Screening to Determine Whether a Company Has Operational Substance

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

The first step is the "core screening," which determines whether a company has operating assets of sufficient scale. According to MSCI's consultation document, companies whose operating assets account for more than 50% of total assets can pass this stage; companies that do not meet this ratio proceed to the next step of screening.

The second step revolves around five financial indicators. The first is operating assets, examining how much of a company's assets are actually used to conduct business; the second is operating expenses, determining whether there is operating input commensurate with the scale of assets; the third is operating cash flow, observing whether the business can generate cash; the fourth is changes in fair value, determining whether financial performance is mainly driven by price fluctuations of held assets; and the fifth is dependence on external financing, examining whether a company mainly relies on financing to accumulate assets.

For companies that fail the core screening, if at least four of the five indicators trigger exclusion conditions, they will be deemed ineligible for inclusion.

However, failing the screening in a single period does not mean existing constituents will be deleted immediately. MSCI has set up a buffer mechanism: existing constituents will be deleted only if they fail the screening in both of the most recent two annual reporting periods; non-constituents are ineligible for new inclusion if they fail the screening in either of the most recent two annual reporting periods. MSCI may also refer to the latest interim reporting materials.

This means that retaining a small software or hotel business may not be enough to maintain index eligibility; holding a large amount of crypto assets will not automatically trigger deletion either. The key judgment is the weight of operating business in the company's overall financial structure and whether non-compliance persists.

Five Face Deletion, 17 Enter the Watchlist

The currently disclosed potential deletion list includes five companies. Among them, three are related to crypto treasuries, namely Bitcoin holder Strategy, Metaplanet, and Upexi, which focuses mainly on a SOL treasury; the other two are uranium investment company Yellow Cake and Icelandic investment holding company Skel fjárfestingafélag.

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

The two lists correspond to different risk stages. The potential deletion list still awaits confirmation at the final November review; companies on the watchlist have not yet met the deletion requirements and may be removed only if they continue to fail the screening later.

Beyond Passive Selling, the Bigger Impact Is on Financing

Index eligibility is directly tied to passive fund allocation. After a company is deleted, funds tracking the relevant indices need to adjust their holdings, which may create concentrated selling pressure.

Strategy has become a market focus due to its large size. JPMorgan previously estimated that if excluded by MSCI, Strategy could face about $2.8 billion in fund outflows; if other major index providers follow suit, the scale could rise to about $8.8 billion. Strategy emphasized that funds tracking MSCI GIMI hold about 13 million MSTR shares, accounting for 3.1% of basic shares outstanding and roughly equivalent to 60% of its 30-day average daily trading volume, and believes the relevant adjustments will not have a material impact on the company.

But trading volume cannot be directly equated with the capacity to absorb net selling. For treasury companies, the longer-term question is: will index exclusion compress the valuation premium and thereby reduce the efficiency of financing to buy coins?

Such companies typically raise funds by issuing shares, bonds, or preferred stock and then use the proceeds to buy crypto assets. When common stock trades at a high premium to net asset value, issuing shares to buy coins more easily increases the assets corresponding to each share; after the premium narrows, the same scale of financing requires issuing more shares, and dilution for existing shareholders becomes more pronounced.

Therefore, the impact of the new rules is not only how many shares are sold during rebalancing, but also whether treasury companies can continue to finance on favorable terms. If they shift more toward debt or preferred stock, they will also need to bear the corresponding interest, dividend, and repayment pressures.

Why Are Treasury Companies' "Operational Attributes" Being Targeted Now?

The disagreement between treasury companies and MSCI lies in whether financing, holding coins, and issuing financial products should count as businesses with operational substance.

Strategy argues that the company does not passively hold Bitcoin but conducts financing and financial product businesses on that basis. 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 plan for digital asset treasury companies under a new framework.

Saylor also said in a Bloomberg interview that the scale of funds tracking the relevant indices is limited and that exclusion would have little impact on Strategy. But he questioned MSCI's differential treatment of different assets: "Oil, natural gas, land, and machines all count as capital, but Bitcoin does not." In his view, this reflects a bias against Bitcoin.

But under MSCI's screening logic, conducting these businesses does not mean a company automatically qualifies for index inclusion. If a company's assets are still mainly investment holdings, its financial performance mainly fluctuates with asset prices, and its expansion relies on external financing, then even if it continues to conduct trading and securities issuance, it may still be deemed a non-operating company.

Metaplanet, by contrast, has tried to demonstrate its treasury management capabilities through actual trading. The company sold 10,000 BTC in the third quarter and then bought 11,000 BTC, saying the move was intended to demonstrate Bitcoin monetization capacity and the ability to cover interest-bearing debt.

But monetization capacity and operating capacity are not the same thing. Selling coins for cash does not mean the main business can continuously generate cash; buying back more Bitcoin may not change the structure in which assets are mainly investment holdings and expansion relies on financing. Therefore, actively buying and selling assets is not enough in itself to ensure passing the screening; it still depends on how these activities are reflected in financial indicators.

MSCI's new rules will not directly end the treasury model, but they may weaken index funds' support for that model. The final November list will determine which companies exit the index; over the longer term, if valuation premiums narrow, treasury companies will need to prove that they can still sustainably increase net assets per common share after the efficiency of financing to buy coins declines.