Digital asset treasury companies could face “significant pressure” if the MSCI stock index decides to delist them in January, according to one analyst, who told Cointelegraph this is likely.
The MSCI index announced in October that it was consulting with the investment community about the possibility of excluding Bitcoin (BTC) and other digital asset treasury (DAT) companies that have a balance sheet with more than 50% crypto assets.
Some feedback has been that DATs may “exhibit characteristics similar to mutual funds, which are currently not eligible for inclusion in the index,” according to MSCI.
Speaking to Cointelegraph, Charlie Sherry, head of finance at Australian cryptocurrency exchange BTC Markets, said that in his view the odds of MSCI delisting DATs are “solidly in favor” as the index “only puts changes like this into consultation when they are already leaning in that direction.”
The consultation is open until December 31, the conclusion will be made public on January 15 next year and the resulting changes will come into force during February.
Information is also requested on whether additional parameters should be considered, such as whether a company defines itself as a DAT or has raised capital primarily to accumulate cryptocurrencies.
If MSCI decides to delist DATs, Sharry said funds that track indexes would have to be sold, and that alone creates significant pressure on the affected names.
A preliminary list notes 38 crypto companies on MSCI’s radar, including Michael Saylor’s Strategy, Sharplink Gaming, and crypto miners Riot Platforms and Marathon Digital Holdings, among others.
“When most of the value comes from a balance sheet asset rather than the underlying business, MSCI treats it as if it were outside the scope of a traditional equity benchmark,” Sherry said. “It is a risk management decision designed to keep indices aligned with predictable business fundamentals.”
“This also marks a change in tone from last year. Crypto-heavy corporate strategies were applauded as an innovation in the capital markets. Now the big index providers are adjusting their definitions, and this shows that the market is moving out of its full adoption phase and returning to a more conservative filter.”
A Wednesday note from JPMorgan analysts warned that Strategy could lose $2.8 billion
if MSCI advances, and about $9 billion of its estimated $56 billion market value will be in passive funds tracked by indexes, Bloomberg reports.
It is unclear whether other indices could follow suit.
Sherry said it is “difficult to predict at this time” whether MSCI’s decision will influence other index providers.
“Index providers often watch each other’s moves, but they don’t always move at the same pace. S&P’s treatment of MicroStrategy shows there is precedent for taking a stricter view, but each provider has its own methodology and client base to consider,” he said.
Related: The strategy intensifies Bitcoin purchases with the purchase of 8,178 BTC
“If MSCI makes a change, it could open the door for others to review their own rules, but it doesn’t guarantee a chain reaction.”
The strategy still appears on track for possible inclusion in the S&P 500, according to crypto market intelligence firm 10X Research, which also predicted in October that there was a 70% chance it would be added to the index before the end of the year.
Clearer rules are good for cryptocurrencies
Meanwhile, Sherry also said that clearer rules on corporate classification ultimately help the space.
“When companies understand exactly how their treasury decisions will be treated, it eliminates uncertainty for both issuers and investors,” he added.
“Well-defined frameworks tend to strengthen institutional confidence in the long term, even if the short-term impact is uncomfortable for stocks built around Bitcoin holdings.”
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