On August 14, Strategy Inc. (Nasdaq: MSTR) issued a public rebuttal to MSCI's statement after the index provider this month initiated consultations on excluding the largest corporate Bitcoin holder from its global equity indices. Funds that track these indices adjust their portfolios accordingly, turning the selection rule into automatic portfolio changes.
"Digital assets are assets," the company wrote on X, arguing that index providers should measure markets, not define what assets companies can own. Strategy stated that MSCI's proposal does not align with the stance of regulators, markets, and clients, adding that neither Bitcoin nor the company itself is dependent on the index provider.
As part of the consultation, MSCI proposes a two-stage filter for so-called "non-operating companies"—firms whose value appreciates due to assets on their balance sheet rather than business income. An issuer passes the first stage if operating assets constitute more than half of total assets.
How MSCI's New Filter Identifies 'Bitcoin Treasuries'
Issuers failing this primary test are then screened against five financial ratios covering operating asset intensity, expense intensity, operating cash flow, fair value intensity, and capital dependency. Four "red flags" out of these five deem a company unsuitable for inclusion in Global Investable Market Indices.
The proposal applies more lenient thresholds to current index constituents than to external candidates: starting with an operating asset share of less than 10% of the balance sheet and operating expense share of less than 5% of assets. Negative operating cash flow, excessive non-operating fair value fluctuations affecting both assets and revenue, and financing cash flow exceeding 30% of assets, along with reporting confirming external financing was raised to purchase assets, complete this set of criteria.
Index constituents must fail the criteria for two consecutive years before being removed, while new entrants lose eligibility after just one reporting period. MSCI follows a cautious policy to limit turnover, so a single instance of non-compliance does not lead to loss of index membership.
Which Companies Are Slated for Exclusion
MSCI's simulation using the MSCI All Country World Investable Market Index (ACWI IMI) identified three companies for exclusion as of May. Strategy was the only large-cap company among them, with a free-float adjusted market value of $23.93 billion.
Following it is London-listed uranium mining company Yellow Cake with a market value of $1.81 billion, and Tokyo-listed Metaplanet—$654 million; both companies fall into the small-cap category. Additionally, as of the end of the second quarter, Metaplanet held approximately 43,000 $BTC and uses these reserves as collateral for loans.
Three more companies enter a new public watchlist: Taiwan's Center Laboratories with a market cap of $673 million, Turkey's Lydia Holding at $319 million, and SharpLink, managing ether reserves, at $165 million. Yellow Cake holds physical uranium, not tokens, indicating the selection criteria extend beyond digital assets.
A Rule MSCI Already Abandoned Once
In its previous attempt, MSCI singled out digital asset holding companies, defining them as issuers where half or more of total assets are cryptocurrency, and named 39 candidates. Executive Chairman Michael Saylor and CEO Phong Le signed a letter in December calling this threshold discriminatory, arbitrary, and unworkable.
That proposal was shelved on January 6, and MSCI promised a broader review of non-operating issuers. The new proposal contains no cryptocurrency threshold; however, it impacts Strategy through its treasury model mechanism, which raises equity and debt to accumulate Bitcoin.
According to the latest reporting, Strategy owns 840,447 $BTC, having bought roughly 175,000 coins this year and sold about 7,000. Le made it clear the company will resume purchases at the end of this year.
The Cost to Shareholders from an Index Exclusion
Passive investment funds follow index composition, so excluding a company from an index would force index funds to sell Strategy's shares or otherwise rebalance their position in the stock. JPMorgan analysts estimated outflows of around $2.8 billion if Strategy were removed from MSCI indices; this estimate was based on the withdrawn 2025 proposal, not the current one.
Strategy's shares trade close to the value of its Bitcoin portfolio: according to the company's dashboard, the mNAV ratio was about 1x on August 14. This ratio evaluates the company's market value relative to its own reserves. Such a small premium leaves shareholders with limited downside protection should index-tracking funds be forced to sell shares. It also indicates investors assign little additional value to Strategy's ability to raise debt, its capital-raising strategy, and corporate structure beyond its underlying Bitcoin assets.
Furthermore, spot Bitcoin ETFs provide exposure at near-par value without an intervening corporate balance sheet, weakening the argument for a stock premium. Investors can gain Bitcoin exposure without taking on Strategy-specific risks related to debt, convertible obligations, equity dilution, management decisions, or index eligibility. This alternative may cap the premium investors will pay for Strategy, especially when a potential benchmark exclusion creates an additional source of selling pressure.
The feedback period ends September 30, results will be announced by October 16, and any adopted changes will take effect during the index review in November 2026. MSCI notes consultations may or may not lead to changes, and watchlisted companies remain in the index until a second consecutive exclusion, meaning Center Laboratories, Lydia Holding, and SharpLink will face the same filter again next year.
