MSCI Finalizes Rules That Could Disqualify Crypto Treasury Firms

MSCI finalized new rules on Oct. 15 that could affect whether crypto treasury companies qualify for its indexes, with potential consequences for passive investment flows.

The framework assesses companies’ operating assets and uses five financial ratios. It replaces a temporary test focused on firms whose digital-asset holdings were 50% or more of total assets.

A company seeking to join an index must pass the screen in both of its two most recent annual reporting periods. An existing constituent would face exclusion only after failing in two consecutive annual periods. MSCI may also consider a company’s latest interim report.

MSCI’s May simulation identified Strategy, Metaplanet and Yellow Cake as potential cases. SharpLink, an Ethereum treasury company, may also be affected under the finalized rules. The screening does not automatically remove those firms; their status depends on how they meet the new tests.

If a company is removed, ETFs and other funds tracking the affected indexes would need to adjust their holdings. MSCI plans to publish the list of affected companies on Nov. 11.