Strategy Faces Potential Index Removal as MSCI Implements New Eligibility Guidelines
Under the newly implemented methodology, Strategy, Metaplanet and Upexi had been previously flagged for potential removal, with MSCI planning to reveal its definitive exclusion roster on Nov. 11.
Major index provider MSCI has implemented new eligibility guidelines that may result in the exclusion of Strategy, Metaplanet and Upexi from its worldwide indexes, with numerous other cryptocurrency treasury firms also facing the possibility of being removed.
The index provider announced Thursday that it would implement a methodology initially proposed in August, rendering "non-operating companies" ineligible for participation in the MSCI Global Investable Market Indexes.
Strategy (MSTR) was among the firms MSCI had previously flagged for removal from its indexes pursuant to the "non-operating companies methodology." Additional companies including Sharplink, Inc (SBET), Ton Strategy Company (TONX), Solana Company (HSDT) and DeFi Development Corp. (DFDV) are among those designated for placement on a "watchlist" facing possible exclusion.
The exclusion of these companies could compel index funds that track MSCI benchmarks to divest their holdings in the impacted firms' securities, which may exert downward pressure on their share prices and diminish demand from passive investment vehicles.
It removes a company from the default portfolios of tens of millions of people who never chose to remove it.
Conner Brown, executive director of the Bitcoin Policy Institute
The newly implemented methodology requires MSCI to evaluate companies utilizing their operating assets alongside five distinct financial ratios. Firms that fail to meet the requirements of at least four among the five evaluations may be classified as ineligible. For companies already included in the index, they must typically fail the screening criteria across two consecutive annual reporting periods prior to exclusion.
MSCI confirmed that the definitive roster of companies slated for exclusion will be published on Nov. 11 and become effective on Nov. 30, 2026.
Analysts from JPMorgan had previously projected that the removal of Strategy from MSCI indexes might result in approximately $2.8 billion worth of forced liquidations. This projection was associated with MSCI's earlier digital asset-focused proposal, distinct from the regulations implemented Thursday.
Strategy pushed back against the proposed modifications in August while simultaneously minimizing concerns about potential market disruption, indicating that index funds tracking MSCI's Global Investable Market Indexes maintain approximately 13 million shares, which constitutes 3.1% of its basic outstanding shares. The company further noted that these holdings represent less than a single day's average trading volume.