MSCI Proposal Singles Out Bitcoin Treasury Companies And Undercuts Benchmark Neutrality

MSCI is currently considering a new rule that would potentially remove companies from its Global Investable Market Indexes if 50% or more of their assets are held in digital assets like Bitcoin. While the proposal may seem straightforward, the implications of such a rule change are extensive and could have far-reaching consequences for companies like Michael Saylor’s Strategy (formerly known as MicroStrategy), Eric and Donald Trump Jr’s American Bitcoin Corp (ABTC), and numerous other firms worldwide that have fully legitimate, regulated, and traditional corporate treasury practices.

The purpose of the proposed rule is to determine whether companies primarily engaged in Bitcoin or other digital-asset treasury management should be excluded from MSCI’s flagship equity indices if their digital-asset holdings exceed the 50% threshold. The proposed implementation date for this rule is set for February 2026.

The companies that would be impacted by this proposal include Strategy (MicroStrategy), a significant software and business-intelligence company that holds Bitcoin as part of its treasury reserves, American Bitcoin Corp (ABTC), a new public company established by Eric and Donald Trump with a focus on Bitcoin, as well as miners, infrastructure firms, and diversified operating companies using Bitcoin as a long-term inflation hedge or capital reserve.

These companies are publicly traded entities with audited financials, real products, real customers, and established governance structures. They are not “Bitcoin ETFs” but simply have a treasury strategy that involves holding a liquid, globally traded asset like Bitcoin.

JPMorgan analysts have raised concerns that Strategy could potentially face passive outflows of up to $2.8 billion if MSCI decides to remove it from its indices, with additional outflows from other index providers following suit. While the analysis highlights the mechanical nature of passive flows, it fails to capture the broader context.

In terms of liquidity, the potential $2.8 billion outflow scenario represents a minimal fraction of Strategy’s trading volume for the year. The real issue is not the outflow itself but rather the precedent that excluding companies based on their treasury assets would set.

Furthermore, MSCI’s own assets consist predominantly of non-liquid and non-marketable goodwill and intangible assets, comprising over 70% of its total assets. In contrast, Bitcoin is a globally traded asset that is transparent, auditable, and more liquid than many traditional corporate treasury assets.

The proposed 50% threshold for digital-asset holdings would undermine benchmark neutrality, reduce representativeness, and introduce more instability into the indexing system. It would create a binary cliff effect where companies could fluctuate in and out of index eligibility multiple times a year due to Bitcoin’s price volatility, leading to unnecessary turnover and higher fund implementation costs.

If MSCI proceeds with this rule change, passive index funds would be required to sell holdings in affected companies, although the real-world impact would be marginal given the liquidity of companies like Strategy and ABTC. Additionally, exclusion based on digital-asset holdings could signal risk to investors and potentially disadvantage U.S. and Western companies relative to jurisdictions embracing digital capital.

MSCI can achieve transparency and analytical clarity without excluding lawful operating companies by enhancing disclosure, introducing classification or sub-sector labels, or implementing liquidity or governance screens. Exclusion based on digital-asset holdings would create several problems, such as reducing representativeness, violating neutrality, and damaging global competitiveness.

Bitcoin is a legitimate form of money, and companies should not be penalized for including it in their treasury reserves. MSCI should withdraw the proposal to maintain the neutrality and integrity of its benchmarks, reflecting markets as they are rather than as gatekeepers prefer them to be.