MSCI Index Adjustments May Lead to $15 Billion Liquidation of Crypto Treasuries

In light of MSCI's recent proposal to exclude digital asset treasury companies from its Global Investable Market Indexes, there has been a growing backlash from industry leaders. Analysts caution that this decision could prompt a selloff amounting to $10 billion to $15 billion across 39 companies that collectively hold $113 billion in market capitalization.

Key Takeaways

MSCI's proposal to exclude digital assets from its indexes may lead to a selloff of $10-$15 billion.
The final decision on this matter is expected on January 15, 2026.
Industry leaders, including Strategy Inc., are publicly opposing the proposal, emphasizing its potential harm to the market.
Affected companies hold over $137 billion in digital assets, raising concerns about market volatility and forced selling.
The industry is calling for MSCI to reject the proposed changes to maintain index integrity and neutrality.

MSCI Index Changes Could Force $15B Crypto Treasury Selloff

MSCI Crypto Treasury Selloff - Index list

The consultation period concludes on December 31, with a final decision anticipated on January 15, 2026. This proposal particularly targets firms whose digital asset holdings constitute over 50% of their total assets, with the expected implementation set for February’s Index Review.

On December 10, Strategy Inc. lodged a formal complaint against the proposal, in a letter signed by Executive Chairman Michael Saylor and CEO Phong Le. They labeled the proposal as "misguided" and expressed concerns over its "profoundly harmful consequences" for capital markets and America's standing in digital assets.

Distinction Between Operating Businesses and Investment Vehicles

The key argument from Strategy emphasizes the differentiation of operating companies from passive investment entities.

They highlighted that they manage a Bitcoin-backed corporate treasury, alongside a capital markets program which includes the issuance of both equity and fixed-income instruments with varying Bitcoin exposure.

BitcoinForCorporations provided a technical analysis indicating that MSCI’s proposal violates fundamental benchmark principles of representativeness, neutrality, and stability, as dictated by IOSCO and BMR standards.

Importantly, the group pointed out that MSCI has historically accepted Real Estate Investment Trusts (REITs) despite their significant concentration in real estate, as well as Berkshire Hathaway, known for its large investment portfolio, and mining companies with vast gold reserves. However, they have never disregarded operating companies based solely on the makeup of their treasury assets.

Strategy cautioned that MSCI’s 50% threshold is arbitrary and noted the potential volatility in cryptocurrency values could lead companies to frequently “whipsaw on and off” the indices, depending on market fluctuations.

Industry Coalition Questions MSCI’s Methodology

Strive Asset Management also voiced opposition on December 6. CEO Matt Cole argued that the proposal fails to recognize the pivotal role that Bitcoin-focused companies play within AI infrastructure. He highlighted that mining companies like MARA Holdings, Riot Platforms, and Hut 8 are adjusting their data centers to support intensive AI workloads. “Many analysts argue that the AI race is increasingly limited by access to power, not semiconductors,” noted Cole.

Strive suggested an alternative index version that excludes digital asset treasuries, enabling selective avoidance while maintaining comprehensive market exposure for other entities.

Currently, over 1,000 signatures have been collected in support of the petition from BitcoinForCorporations against the exclusion. Bitwise Asset Management has also backed this strategy, asserting, “the power of a great index lies in its neutrality.”

Financial Impact Analysis Indicates Elevated Risk

JPMorgan analysts had previously estimated that Strategy alone could experience $2.8 billion in outflows, with $9 billion of their market cap managed by passive funds.

According to BitcoinForCorporations’ analysis, total forced selling could range from $10 billion to $15 billion. The anticipated tracking errors might vary between 15 to 150 basis points based on market volatility, which could severely impact institutional mandates with tracking tolerances of 20 to 50 basis points.

MSCI Crypto Treasury Selloff - Cumulative Turnover Cost by Scenario

The preliminary list includes 18 current constituents facing immediate removal, which collectively represent $98 billion in market capitalization, accounting for 87% of the overall capital impact. Additionally, 21 non-constituents valued at $15 billion could face permanent exclusion, representing significant preemptive measures in MSCI’s methodology. Notably, Strategy constitutes 74.5% of the total impacted market cap, amounting to $84.1 billion.

Estimated implementation costs are projected between $50 million and $225 million across various index families, with turnover costs anticipated to range from 5 to 25 basis points. The MSCI ACWI is expected to face the largest estimated impact, between $55 million and $225 million.

MSCI Crypto Treasury Selloff - Tracking Error Bands by BTC Volatility Regime

Speaking to Cryptonews, Farzam Ehsani, Co-founder and CEO of VALR, mentioned that markets are beginning to account for potential forced selling. “The market is not only assessing the likelihood of a decline in stock prices of companies reliant on Bitcoin fluctuations but also potential chain reactions within funds using these indices as benchmarks,” Ehsani stated.

The affected companies collectively hold over $137 billion in digital assets. All eyes are on MSCI as the industry anticipates their decision on January 15. Strategy has urged MSCI to reject the proposal, asserting that it would be wiser for MSCI to maintain neutrality and allow the markets to dictate the course of digital asset treasuries.