Key Takeaways
- • MSCI will remove Strategy (MSTR.O), Metaplanet (3350.T) and Yellow Cake (YCA.L) from its MSCI USA and MSCI World indexes effective December 1, after determining the companies more closely resemble investment funds than operating businesses.
- • The exclusion follows MSCI's 2025 proposal to drop digital asset treasury companies whose holdings represent 50% or more of total assets, and a broader review of what it calls "non-operating companies."
- • Strategy warned last year that an exclusion would force the liquidation of $2.8 billion of its stock and would "chill" the industry; J.P. Morgan estimated outflows of up to $8.8 billion if other index providers follow suit.
- • Strategy's shares have fallen about 20% year to date while bitcoin is down 15%, and shares slipped 2.5% in extended trading following the announcement.
- • SharpLink, an Ethereum treasury company, is on MSCI's watchlist, signaling that further digital asset treasury firms could face similar treatment.
Summary
Index operator MSCI will remove Michael Saylor's Strategy and other companies from its global indexes after determining they more closely resemble investment funds than operating companies, a move that could curb passive investment flows into the stocks, according to Reuters. The companies will be removed from the MSCI USA and MSCI World indexes on December 1. Tokyo-listed Metaplanet, which also buys and holds bitcoin, and UK-based uranium-buying company Yellow Cake were also on the exclusion list. Strategy, Metaplanet and Yellow Cake did not immediately respond to Reuters requests for comment.
MSCI had last year proposed excluding digital asset treasury companies whose holdings represent 50% or more of their total assets, then launched a broader review into what it termed "non-operating companies," which it said have fund-type characteristics and are excluded from its benchmarks. Companies such as Ethereum treasury platform SharpLink were on the watchlist published by MSCI on Wednesday.
Strategy pioneered digital-asset treasuries last year, often issuing fresh debt and equity to fund aggressive bitcoin accumulation. That approach attracted investors seeking indirect crypto exposure and boosted bitcoin prices, but also left the companies vulnerable to crypto price volatility. Strategy's shares have slid around 20% so far this year, while bitcoin prices are down 15%. The shares fell 2.5% in extended trading on Wednesday.
Index inclusion matters to companies such as Strategy because passive funds and other investors tracking benchmarks are required to hold their shares. Strategy warned last year that an exclusion would result in $2.8 billion of its stock being liquidated and would "chill" the industry. J.P. Morgan had previously estimated that MSCI's shake-up could lead to outflows of as much as $8.8 billion from Strategy stock if other index providers follow suit.
MSCI had last year proposed excluding digital asset treasury companies whose holdings represent 50% or more of their total assets, then launched a broader review into what it termed "non-operating companies," which it said have fund-type characteristics and are excluded from its benchmarks. Companies such as Ethereum treasury platform SharpLink were on the watchlist published by MSCI on Wednesday.
Strategy pioneered digital-asset treasuries last year, often issuing fresh debt and equity to fund aggressive bitcoin accumulation. That approach attracted investors seeking indirect crypto exposure and boosted bitcoin prices, but also left the companies vulnerable to crypto price volatility. Strategy's shares have slid around 20% so far this year, while bitcoin prices are down 15%. The shares fell 2.5% in extended trading on Wednesday.
Index inclusion matters to companies such as Strategy because passive funds and other investors tracking benchmarks are required to hold their shares. Strategy warned last year that an exclusion would result in $2.8 billion of its stock being liquidated and would "chill" the industry. J.P. Morgan had previously estimated that MSCI's shake-up could lead to outflows of as much as $8.8 billion from Strategy stock if other index providers follow suit.
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