Strategy Faces Potential MSCI Index Exclusion Under New Rules

MSCI has adopted new index eligibility rules which could put companies like Michael Saylor’s Strategy at risk of dropping out of MSCI indices.

MSCI’s new rule applies to companies with substantial non-operating assets, replacing the earlier, narrower focus on crypto treasury firms with 50%+ crypto holdings.

Under the initial screen, if more than 50% of assets are operating assets, the company passes. 

However, if it fails, MSCI checks five ratios: very low operating assets (below 20%, or 10% for existing constituents), operating expenses under 5% of assets, negative operating cash flow, large fair-value swings in non-operating assets, and heavy reliance on external capital raising.

A company flagged on four of the five becomes ineligible for MSCI’s Global Investable Market Indexes.

Related: Strategy Pushes Back on MSCI Plan to Exclude Crypto-Heavy Firms, Warning of Bias Against Digital Assets

There is a buffer, though: existing constituents must fail in both of their two latest annual periods to be removed, while new candidates can be blocked by failing either one. MSCI may also weigh more recent interim filings.

Strategy is currently included in major MSCI benchmarks including the MSCI World and MSCI USA indexes, meaning its shares are held by funds that track those benchmarks. Its inclusion also feeds into broader global indexes such as MSCI ACWI.

The Potential Impact on Strategy

JPMorgan previously estimated that Strategy could face about US$2.8 billion (AU$4.03 billion) in passive outflows if it were removed from MSCI indices, with another US$8.8 billion (AU$12.66 billion) potentially at risk if other index providers followed suit.

The rules take effect with the November 2026 index review, and MSCI will publish the final list of affected companies on 11 November, with changes effective after the close on 30 November.

None of this means that Strategy has to sell Bitcoin, and Saylor has played down the potential impact. Before MSCI announced its decision, he said in an interview on Bloomberg Crypto that a potential exclusion was “not that important to us”.

Read also: US Inflation Spooks Markets, Sends BTC Below $82K Amid Rate Hike Fears

However, Saylor also said MSCI’s position had been “disappointing” and criticised the index provider for “imposing prejudicial values on digital assets”.

Saylor said deciding that oil, machinery, land and natural gas were capital but Bitcoin was not was “a value judgment”, adding that MSCI was “acting like an unregistered financial advisor”.