Index Reclassification Puts Crypto Treasury Model to the Test
TREE NEWS reports: MSCI will release its final index review list after the U.S. market close on Nov. 11, a decision that could remove Strategy from its flagship indices and trigger forced selling by passive funds tracking those benchmarks. Solid Intel estimates that a removal from MSCI’s flagship index alone could force index funds to unload up to $2.8 billion of MSTR equity. Five digital asset treasury companies are on the preliminary removal watchlist, including Japan-listed Metaplanet, which holds roughly 44,000 BTC. Because Strategy accounts for more than 90% of the affected group’s circulating market value, the review has become Wall Street’s key test case for liquidity risk across crypto treasury firms.
From 50% Threshold to Operating-Asset Test
MSCI opened a consultation in October 2025 proposing to exclude companies whose digital assets exceed 50% of total assets from its Global Investable Market Indexes and to suspend weight increases for such firms. On Oct. 15, 2026, MSCI finalized a non-operating entity rule that instead relies on financial screening: a company is deemed non-operating if it fails the operating asset test in two consecutive annual reports and misses four of five metrics covering operating assets, expenses and cash flow. Strategy argued in its comment letter that such a classification lacks a basis in generally accepted accounting principles. In its latest quarterly filing with the SEC, the company formally disclosed the compliance risk of index removal under the new parameters.
Contagion Could Reach $8.8 Billion
JPMorgan analysts calculate that exclusion from MSCI’s flagship index alone would force index funds to cut about $2.8 billion of MSTR shares. If other major global index providers adopt similar rules, cross-index passive selling could expand to as much as $8.8 billion. Because passive vehicles must track their benchmarks, index funds cannot delay sales at their own discretion; liquidity pressure would concentrate around the effective date.
Equity Sales Do Not Touch the Bitcoin Base
Passive equity selling and disposal of underlying bitcoin holdings sit at different layers. Strategy recently raised $283.8 million through at-the-market equity issuance to buy 1,036 BTC and still holds $4.77 billion in dollar reserves. As of Nov. 8, 2026, it holds 850,364 BTC at a total cost of $64.16 billion, or an average of $75,456 per coin. Passive fund sales occur only in the secondary equity market and do not trigger custodians to sell spot bitcoin; the reserve assets remain segregated. Still, losing an index seat affects trading liquidity and valuation premiums. As the equity premium to net asset value narrows, the spread available for issuing stock to buy bitcoin shrinks, reducing the turnover efficiency of the accumulation flywheel.
What to Watch
The final MSCI list is due after the close on Nov. 11. If the change is confirmed, the constituent removal takes effect after the U.S. close on Nov. 30, 2026, and tracking funds must complete their position exits within that window. Investors should watch the premium to NAV, ATM issuance activity and any follow-on moves by other index providers as signals of how much pressure the treasury-company model faces.
