Bullish for Strategy? MSCI Keeps Digital Asset Treasury Companies in Indexes

MSCI announced on January 6, 2025, that it will not exclude digital asset treasury (DAT) companies from its global indexes as initially proposed. Instead, the firm will conduct a broader consultation on non-operating entities before making any changes to index composition. This decision provides clarity to institutional investors and DAT companies alike, at least for the near term.

The index provider stated that the move reflects the need to ensure its methodologies remain consistent with the fundamental goal of measuring operating company performance. It acknowledged the complexity in distinguishing between investment-oriented entities and operating companies that hold non-operating assets as part of their treasury strategies. This review is expected to last six to nine months.

Market participants responded positively to the news. Strategy, a prominent DAT company, saw its shares rise 6% in after-hours trading following the announcement. Bitcoin also rose modestly, suggesting the market interpreted the news as supportive of digital asset-related investments.

Why the Move Happened

MSCI emphasized that the decision to keep DAT companies in its indexes for now was driven by the need for broader consultation. The firm noted that current index treatment for DAT companies remains unchanged. Companies with digital assets accounting for 50% or more of total assets will continue to be included under current eligibility criteria.

MSCI cited concerns raised by investors who suggested some DAT companies resemble investment funds, which are typically excluded from the index. The firm acknowledged that further research is necessary to define operational criteria that can distinguish operating companies from investment-focused entities.

How Markets Responded

The announcement led to an immediate positive reaction in the market. Strategy (MSTR) shares surged 6% after hours, driven by the continued inclusion of DAT companies in MSCI indexes. This move supports passive index fund inclusion, maintaining liquidity and institutional demand for digital assets.

Bitcoin prices also showed a modest upward movement following the news. The broader market seemed to view MSCI's decision as a sign of increasing institutional acceptance of digital assets as a legitimate treasury strategy.

What Analysts Are Watching

Analysts are now focused on the broader consultation process. MSCI plans to refine its methodologies for non-operating companies to ensure index alignment with its operating performance objectives. This process will involve surveying institutional investors, analyzing academic research, and reviewing regulatory developments across jurisdictions.

The outcome of this review could shape how digital assets are treated in global financial markets. If MSCI decides to exclude certain entities, it could impact investment strategies and corporate treasury practices. Investors will be watching for any changes to index composition that might occur after late 2025 or early 2026.

Regulatory developments also remain a key factor. The Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission (SEC) have been reviewing digital asset accounting and disclosure requirements. These regulatory changes may influence how companies report and manage their digital asset holdings.

The continued presence of DAT companies in MSCI indexes underscores the evolving nature of corporate treasury strategies. As digital assets become more integrated into financial portfolios, institutions and regulators must adapt to ensure transparency and consistency across markets.