What happens if MSCI drops crypto treasuries like Strategy?

Index provider MSCI recently approved new rules that target "non-operating" companies, which mainly hold assets instead of running a business, such as digital asset treasury firms, or DATs.

Under the new rules, MSCI will first check whether a company has substantial operating assets, such as equipment or inventory. In the proposal MSCI published in August, that meant operating assets making up more than half of total assets. Companies that fail this check face five financial tests, which in the proposal included whether a company generates operating cash flow and how much it relies on raising capital to buy assets. Those flagged on four or more will be excluded.

Current index members get some leeway: they will be removed only if they fail in both of their two most recent annual filing periods. If they fail in only one, they stay in the index unless they fail the following year. Companies not yet in the index are blocked if they fail in either of the last two years.

In a simulation published in August using May data, MSCI flagged two bitcoin treasury companies, Michael Saylor's Strategy and Japan's Metaplanet, for potential exclusion. Ethereum treasury firm SharpLink was placed on a watchlist. MSCI will publish its final list on Nov. 11.

Last November, JPMorgan said removal from MSCI could trigger $2.8 billion in forced selling of Strategy shares, rising to $8.8 billion if other index providers follow suit. Strategy has downplayed the risk, saying MSCI-tracking funds hold just 3.1% of its shares, less than a single day's normal trading volume.

Two days before MSCI's announcement, Saylor criticized MSCI's logic for deciding what counts as an operating company, telling Bloomberg digital credit is Strategy's product. "We found a way to create the world's best credit and do it with the world's best capital. So we are an operating company. That's not really a debate in the accounting profession."

MSCI's decision lands on a sector already under strain. The Funding has tracked DATs through their rise and recent struggles. In mid-2025, VCs were backing them for their premiums and for giving institutions access to tokens they couldn't hold directly. By September, DATs had raised more than $20 billion in VC funding that year, and investors were already expecting a slowdown. Two months later, premiums had compressed and companies were turning to buybacks.

Most investors I spoke with share MSCI's view that these companies look more like funds than businesses.

"I think most DATs are much more similar to BDCs [business development companies] or closed-end funds than operating businesses," said Lex Sokolin, co-founder and managing partner at Generative Ventures. "They have a small team, a ton of capital leverage, and a financial engineering business model."

Richard Galvin, executive chairman and chief investment officer at Digital Asset Capital Management, agreed that for now they are "effectively fund/investment companies." Even Kyle Samani, chairman of Solana treasury company Forward Industries and former managing partner and co-founder of Multicoin Capital, said MSCI "might have a point" about most of the sector, "since a company whose only activity is issuing stock to buy a single asset does look a lot like a closed-end fund." As for Forward, he said it runs its own validator, makes private market investments and has deployed LP capital into tokenized real-world asset protocols.

How much do index buyers matter for raising capital?

Opinions differ on how much index exclusion matters. Samani said index membership is "an important part of a treasury company's ability to access capital markets." It "gives the treasury company a built-in buyer, and passive funds make stocks easier to borrow, which supports convertible and options activity that companies rely on."

Julio Moreno, head of research at CryptoQuant, expects the impact to be "minimal." Treasury companies raise money mostly by selling new shares on the open market, he said, so what matters is how heavily the stock trades, and "most of MSTR's heavy daily volume comes from active traders, retail and options-related hedging, because it trades as a leveraged bitcoin proxy."

Steve Lee, co-founder of Neoclassic Capital, sees more at stake. Losing demand from index investors "could compress premiums to NAV, making equity financing less attractive and limiting further crypto accumulation," he said. "The bigger risk is reversing the reflexive cycle that fueled their growth."

This cycle was one reason investors were interested in DATs. But the cycle had already started slowing before MSCI's decision. Strategy's shares now trade at about 1.08 times mNAV, according to its website, compared with three to four times at earlier peaks. This means its shares trade only slightly above the value of its bitcoin holdings, making it harder to raise money by selling new shares and increase bitcoin holdings per share.

Strategy has also made changes. In June, the company announced its Digital Credit Capital Framework, confirming it had raised its USD reserve to $2.55 billion to cover preferred dividends and interest, which has since grown to more than $4.5 billion. The framework authorized a Bitcoin monetization program of up to $1.25 billion and approved $2 billion in stock buybacks. Later, during the week of Aug. 3, Strategy sold 1,690 BTC for $108.6 million to fund preferred stock repurchases. CEO Phong Le described the pivot as an evolution "from one-way capital issuance to active capital management."

Should DATs change to stay in indexes?

Nobody I spoke with thinks treasury companies should reshape themselves just to pass MSCI's test. But most think they should change anyway, and pass the test investors set last month: generating recurring income that covers costs, interest and dividends without selling tokens or issuing more shares.

"The driver should be building real cashflow and adding to their project's ecosystem, not chasing index inclusion," Galvin said. "It's a win-win where a DAT moves into operating businesses adjacent to its token's ecosystem."

Samani said changing a business purely for an index "isn't the right way to view things." But "earning yield, raising capital in a disciplined way, and diversifying the revenue base through synergistic operating businesses" would help a company pass index tests "while also delivering more value to shareholders."

For bitcoin treasuries, the most realistic way to look more like an operating business is to earn revenue from the bitcoin itself, Moreno said. Some already do this by collecting premiums from selling options on their holdings. But that revenue "is still low compared with the value it generates by just holding the bitcoin."

Sokolin doubts most can make the leap. "Most do not have the capacity to operate anything at all given their management profiles," he said, though some can buy yield-generating businesses tied to their token, "like a miner or validator."

Staking, often pitched as an edge for ether and Solana treasuries, isn't a clear way out either. Samani said bitcoin treasuries are "structurally more exposed because BTC doesn't produce native yield," but staking income "alone may not be enough to pass indices tests." Moreno sees no difference, since "staking doesn't generate much revenue," and Galvin noted most non-bitcoin DATs "are too small to have any meaningful index inclusion" anyway.

SharpLink, for instance, has staked nearly all of its ETH and still landed on MSCI's simulated watchlist for exclusion.

Will other index providers follow?

MSCI may only be the start. "Now that MSCI has set precedent and given a template, we may see more pressure on crypto treasury companies that are simply selling shares to buy and stake their treasury asset," Samani said. He sees Nasdaq and CRSP mattering most for larger DATs, given the size of the Invesco QQQ ETF, which tracks the Nasdaq-100, and Vanguard's total-market funds, which track CRSP's index.

Moreno pointed to FTSE Russell, which competes directly with MSCI, making a similar framework "a natural step." He also flagged a route that needs no new rule at all. The Nasdaq-100 excludes financial companies, so "if FTSE Russell ever reclassified Strategy from software to financials, MSTR could drop out of the Nasdaq-100 without Nasdaq writing any new rule."

Is anyone still backing DATs?

For new deals, hardly anyone. "If the 2025 bitcoin treasury company bubble showed us something, it was that there is not much room for copycats of Strategy," Moreno said. Several treasury companies launched in 2025 have since sold all or much of their bitcoin. "I would not consider a new crypto treasury company deal."

Lee sees "a much higher bar." "Simply accumulating crypto assets is no longer a compelling investment thesis, particularly with direct ETF access," he said.

Leigh Drogen, general partner and CIO at Starkiller Capital, put it more bluntly. DATs existed mainly to give access to "large institutions who couldn't buy spot coins," he said, and many have gone "from trading at a significant premium to NAV to a discount."

That discount has become a trade of its own. Starkiller's yield fund has been running an mNAV trade on StablecoinX (USDE) for several months, Drogen said, as its shares moved from 0.2 times the value of its holdings to 0.5. He expects 0.7, now that previously locked tokens have unlocked. Galvin's firm has been buying existing DAT shares on the secondary market over the last quarter, in names "where we already want the underlying token and think the DAT, through valuation discount, is a better entry point than buying it directly."

Samani argues the model still works when done well. "A properly run crypto treasury company can deliver real shareholder value, outperform the treasury asset and the native staking rate of the treasury asset," he said, though he conceded most "are falling short."

Galvin said a pure treasury company "would likely trade at a discount." What he would back is something different: "A DAT that also had material operating businesses in the token's ecosystem — which I guess isn't strictly a DAT anymore — is something we'd consider backing in a primary raise."

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