MicroStrategy rebuts MSCI plan to exclude firms with >50% crypto treasuries from indexes
MicroStrategy (MSTR) formally protested MSCI’s draft rule to exclude companies whose balance sheets hold more than 50% in digital assets from major MSCI investable-market indexes. The company argued in a 12-page response that the 50% digital-asset threshold is arbitrary, inconsistently applied because of accounting differences (US GAAP fair-value remeasurement vs IFRS cost accounting), and would treat operating firms with crypto treasuries as if they were passive funds. MicroStrategy said the rule risks forcing repeated index inclusion/exclusion as crypto prices swing, prompting volatile passive fund rebalancing and significant selling pressure; analysts estimate potential passive outflows of $2.8–8.8 billion if MSTR were removed. The firm insists it is an operating software company with roughly $500m revenue and structured financial products backed by Bitcoin, and argued the policy conflicts with U.S. pro-crypto initiatives. MSCI’s consultation runs through mid-January with a decision expected by Jan 15, 2026 and possible implementation at the February rebalance. For traders: if MSCI keeps the draft, expect forced passive reallocations, elevated selling pressure on MSTR and other crypto-heavy equities, and increased short-term volatility in BTC-linked names; if MSCI revises the rule or creates alternative indexes, institutional access to crypto treasury exposure may broaden, reducing forced selling risks.
Bearish
The proposed MSCI rule and MicroStrategy’s rebuttal raise near-term downside risks for Bitcoin-linked assets because forced index exclusion would trigger mechanical passive outflows and selling pressure. If MSCI keeps the >50% digital-asset threshold, affected names like MSTR would likely face large forced redemptions from index-tracking funds, amplifying short-term volatility and downward price pressure on MSTR and, indirectly, on BTC-related equities. The accounting-treatment argument and potential for repeated inclusion/exclusion increase uncertainty, which typically reduces appetite and liquidity in the short term. Over the medium to long term the impact could be neutralized if MSCI revises the rule or creates new indexes that accommodate crypto-treasury firms—this would broaden institutional access and reduce forced selling risk. But until MSCI’s final decision (expected by Jan 15, 2026) the dominant effect is elevated downside risk for securities closely tied to crypto treasuries.