Key Takeaways
- • MSCI has rolled out a new methodology targeting "non-operating companies" and placed Strategy (MSTR), Sharplink Inc. (SBET), Ton Strategy Company (TONX), Solana Company (HSDT), and DeFi Development Corp. (DFDV) on an exclusion watchlist, with Metaplanet and Upexi also in the mix, per Altcoins News.
- • Under the new screening, a company failing at least four of five operating-asset financial ratios is flagged as non-operational, and existing index members must fail in two consecutive annual reviews before removal.
- • The final exclusion list will be announced November 11, with changes taking effect November 30.
- • JPMorgan previously estimated Strategy's exclusion alone could force roughly $2.8 billion in passive stock sales.
- • Strategy says MSCI-linked funds hold about 13 million of its shares, or 3.1% of shares outstanding, which it argues can be absorbed within a single day of normal trading.
Summary
MSCI, the global index provider, has introduced a new methodology aimed at what it calls "non-operating companies," and the change lands squarely on crypto treasury firms. Strategy, which has built its corporate model around holding Bitcoin as its primary treasury asset, is among the companies on the watchlist. Sharplink Inc., Ton Strategy Company, Solana Company, and DeFi Development Corp. are also flagged, with Metaplanet and Upexi included in the broader group. All face potential removal from MSCI's Global Investable Market Indexes, benchmarks that passive funds worldwide track closely. According to the report, removal can trigger forced selling by index-tracking funds.
MSCI's screening relies on five financial ratios tied to operating assets. A company failing at least four of the five tests is flagged as non-operational. Existing index members must fail the screening in two consecutive annual reviews before MSCI removes them, which provides a buffer against immediate exclusion. The final list of companies set for exclusion will be announced on November 11, and changes take effect November 30.
The financial stakes are substantial. JPMorgan previously estimated that Strategy's exclusion alone could force roughly $2.8 billion in stock sales, since index-tracking funds must sell when a constituent leaves the index. Strategy has pushed back on the concern, stating that MSCI-linked funds hold around 13 million of its shares, approximately 3.1% of its total share count, a volume it says can be handled within one day of normal trading. The report notes that whether the market views this as reassuring is unclear.
The article argues the concern extends beyond any single company. Strategy, Metaplanet, and Upexi have pursued strategies in which Bitcoin holdings are a central balance-sheet feature and the stock price tracks crypto exposure, which the methodology appears designed to capture. The smaller firms on the list, the report suggests, have less trading volume and name recognition to absorb a forced sell-off than Strategy does. Restructuring to shift their operational profile within the review window is not straightforward for firms whose models are built around crypto treasury holdings.
MSCI's screening relies on five financial ratios tied to operating assets. A company failing at least four of the five tests is flagged as non-operational. Existing index members must fail the screening in two consecutive annual reviews before MSCI removes them, which provides a buffer against immediate exclusion. The final list of companies set for exclusion will be announced on November 11, and changes take effect November 30.
The financial stakes are substantial. JPMorgan previously estimated that Strategy's exclusion alone could force roughly $2.8 billion in stock sales, since index-tracking funds must sell when a constituent leaves the index. Strategy has pushed back on the concern, stating that MSCI-linked funds hold around 13 million of its shares, approximately 3.1% of its total share count, a volume it says can be handled within one day of normal trading. The report notes that whether the market views this as reassuring is unclear.
The article argues the concern extends beyond any single company. Strategy, Metaplanet, and Upexi have pursued strategies in which Bitcoin holdings are a central balance-sheet feature and the stock price tracks crypto exposure, which the methodology appears designed to capture. The smaller firms on the list, the report suggests, have less trading volume and name recognition to absorb a forced sell-off than Strategy does. Restructuring to shift their operational profile within the review window is not straightforward for firms whose models are built around crypto treasury holdings.
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