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Strategy might lose its spot in one of the world’s most influential stock indexes. MSCI, the global index provider, has rolled out a new methodology targeting what it calls “non-operating companies,” and the fallout is landing squarely on crypto treasury firms.
Why It Matters
The inclusion of crypto treasury firms on MSCI's exclusion watchlist underscores the growing scrutiny of companies operating in the cryptocurrency space, particularly those classified as "non-operating." This move may reflect broader regulatory trends and market sentiment that could impact investor confidence and liquidity in the crypto sector, as index providers increasingly align their methodologies with evolving market standards and risk assessments. The potential removal of these firms from a significant index could also signal a shift in institutional investment strategies towards more traditional operational metrics, further complicating the landscape for crypto-related businesses.
The companies now sitting on a watchlist include Strategy (ticker: MSTR), Sharplink Inc. (SBET), Ton Strategy Company (TONX), Solana Company (HSDT), and DeFi Development Corp. (DFDV). Metaplanet and Upexi are also in the mix. All of them face potential removal from MSCI’s Global Investable Market Indexes — a network of benchmarks that passive funds around the world track religiously. Getting kicked out isn’t just a reputational hit. It can trigger forced selling.
Not a small thing.
How the New Screening Works
MSCI’s updated rules center on five financial ratios tied to operating assets. A company that fails at least four of those five tests gets flagged as non-operational. But there’s a buffer built in — existing index members have to fail the screening in two consecutive annual reviews before MSCI actually pulls the trigger on removal. So it’s not an overnight death sentence. It’s more of a slow countdown.
The final list of companies set for exclusion will be announced on November 11. Changes take effect November 30. That’s a tight window, and the firms on the watchlist basically can’t do much between now and then except watch and wait.
JPMorgan previously estimated that Strategy’s exclusion alone could force roughly $2.8 billion in stock sales. That’s a big number. Funds tracking MSCI indexes don’t have a choice — if a stock leaves the index, they sell it. It’s pretty much mechanical.
Strategy Pushes Back on the Concern
Strategy isn’t exactly panicking. The company has said that funds linked to MSCI’s indexes currently hold around 13 million of its shares. That’s about 3.1% of Strategy’s total share count. Their argument: that volume is manageable within a single day of normal trading. So the forced selling, if it happens, probably won’t crater the stock the way some fear.
Whether that’s reassuring or just spin depends on who you ask. Unclear if the market will be as calm about it as Strategy seems to be.
And it’s worth stepping back here. The broader issue isn’t just about one company. Strategy has become kind of the poster child for a specific corporate playbook — loading the balance sheet with Bitcoin as a primary treasury asset, with the stock price essentially tracking crypto exposure. Metaplanet in Japan has done something similar. So has Upexi. These aren’t traditional operating businesses by most conventional definitions, and that’s exactly what MSCI’s new methodology is designed to catch.
Passive investing has exploded over the past decade. Index inclusion has become a serious lever for stock liquidity and institutional interest. When a company lands in an MSCI index, passive funds buy it automatically. When it gets removed, they sell. The companies on this watchlist built strategies — in some cases, entire corporate identities — around holding digital assets. Now the rules are shifting under them.
What Happens After November 11
The November 11 announcement will be the real moment of truth. That’s when MSCI finalizes which companies are actually out. Between now and then, the watchlist status creates a kind of limbo — investors don’t know exactly what to price in, and the companies themselves are probably running through scenarios internally.
For Sharplink, Ton Strategy, Solana Company, and DeFi Development Corp., the stakes are arguably higher than for Strategy. Strategy has enough trading volume and name recognition that a forced sell-off might be absorbed. Smaller firms on the list don’t have that cushion.
The two-consecutive-annual-review requirement does give companies some theoretical runway to restructure or shift their operational profile. But it’s not obvious what that looks like for a firm whose entire model is built around crypto treasury holdings. You can’t just flip a switch.
JPMorgan’s $2.8 billion estimate for Strategy alone is probably the number that sticks in investors’ heads. And it should. That’s the kind of figure that moves markets.
Strategy holds approximately 13 million shares in MSCI-linked funds, representing 3.1% of total shares outstanding.
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Frequently Asked Questions
Which companies are on MSCI’s exclusion watchlist?
Strategy (MSTR), Sharplink Inc. (SBET), Ton Strategy Company (TONX), Solana Company (HSDT), DeFi Development Corp. (DFDV), Metaplanet, and Upexi have all been identified for potential removal from MSCI’s Global Investable Market Indexes.
How much stock could be forced to sell if Strategy is removed?
JPMorgan estimated that Strategy’s exclusion could lead to approximately $2.8 billion in stock sales, though Strategy says funds tracking MSCI indexes hold only about 13 million of its shares, or 3.1% of total shares outstanding.
