Index provider MSCI has opened a new consultation that could exclude so-called non-operating companies from its equity indices, with Bitcoin treasury firms Strategy and Metaplanet named on the deletion list. The proposal, if adopted, could lead to removal as early as November, potentially reducing demand for the stocks from passive funds that track MSCI indices.
The consultation targets companies that primarily hold assets rather than operating businesses, a category that would broadly capture Bitcoin treasury firms whose main activity is acquiring and holding cryptocurrency. While the proposal is not specifically aimed at crypto companies, the two most prominent Bitcoin holders are among those that would be affected.
What the Proposal Means
MSCI is one of the world's largest index providers, and its indices are tracked by trillions of dollars in passive investment funds. Inclusion in MSCI indices means that passive funds automatically buy and hold a stock, providing a steady stream of demand. Exclusion would mean that those funds would need to sell their positions, potentially creating selling pressure on the stocks.
For Strategy, which has built itself into the largest corporate Bitcoin holder through aggressive accumulation funded by debt and equity issuance, index exclusion could reduce the pool of investors willing to hold the stock. The company has used its stock as a funding mechanism, issuing shares and convertible debt to raise capital for Bitcoin purchases.
The Non-Operating Company Definition
The consultation proposes to define non-operating companies as those whose primary business activity consists of holding financial assets rather than operating a commercial enterprise. This definition would capture Bitcoin treasury firms, but it could also affect other companies that primarily hold financial assets, including some traditional investment vehicles.
The broad scope of the definition is notable because it suggests that MSCI is not targeting crypto companies specifically but rather addressing a structural issue in index construction. Non-operating companies can distort index performance because their price movements are driven by their holdings rather than business operations.
Impact on Strategy
For Strategy, index exclusion would add to a growing list of challenges. The company has been selling portions of its Bitcoin holdings to fund dividends on its preferred stock and repurchase shares, raising questions about its long-term Bitcoin accumulation strategy. The firm's Bitcoin holdings sit below their average acquisition cost, creating unrealized losses that have drawn scrutiny from investors.
Despite these challenges, Strategy remains the industry giant, with holdings exceeding 700,000 BTC. The company's stock has historically traded at a premium to its Bitcoin holdings, reflecting investor confidence in its ability to continue accumulating. Index exclusion could pressure that premium.
Impact on Metaplanet
For Metaplanet, the impact could be even more significant. The Tokyo-listed company has been building a Bitcoin-focused business, but its primary activity remains holding Bitcoin. The company has recently launched BitBonds as a new funding channel and has been expanding into securities, but MSCI's consultation suggests these efforts may not be enough to classify it as an operating company.
Metaplanet has already faced scrutiny over its large on-chain movements, with CEO Simon Gerovich recently denying rumors that the company sold Bitcoin. Index exclusion would add another layer of pressure on a stock that has been trading well below its Bitcoin acquisition cost.
What Happens Next
The consultation is ongoing, and MSCI has not finalized its decision. If adopted, the changes would take effect at the next index review, potentially as early as November. Companies that are flagged for removal would have time to argue their case or restructure their operations to qualify as operating companies.
The broader implication is that the traditional financial system is still figuring out how to categorize Bitcoin treasury firms. These companies do not fit neatly into existing frameworks, and index providers like MSCI are grappling with how to include them in indices that were designed for operating businesses. The outcome of this consultation could shape how the financial industry treats Bitcoin treasury companies for years to come.
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