The Case for Maintaining Index Inclusion of Digital Asset Treasuries (DATs): Implications for Market Neutrality and Investor Access

The evolution of financial markets in the 2020s has been marked by the emergence of Digital Asset Treasuries (DATs), a novel class of public companies that hold significant reserves of cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) as part of their corporate treasury strategies. From fewer than ten DATs in 2021, the sector has expanded to over 200 companies by September 2025, collectively managing more than $100 billion in digital assets according to market analysis. These entities leverage sophisticated capital-raising tools-such as at-the-market offerings, convertible notes, and staking-linked credit facilities-to optimize returns through yield-enhancing strategies like staking, derivatives, and liquid staking according to industry reports. Their rise reflects a broader transformation in corporate treasury management, blurring the lines between traditional finance and the digital asset ecosystem. However, recent proposals by index providers like MSCI to exclude DATs from major indices threatens to undermine this innovation, raising critical questions about market neutrality and investor access.

The Regulatory and Structural Case for DATs

DATs operate under a regulatory framework that aligns with SEC oversight, ensuring public reporting and transparency akin to traditional equities according to financial analysis. This structure distinguishes them from unregulated crypto-native funds, offering institutional investors a familiar vehicle to gain exposure to digital assets without directly holding tokens. For example, companies like MicroStrategy and Forward Industries have adopted leveraged BTC treasury strategies, leveraging equity issuance to scale holdings while maintaining corporate governance standards according to market reports. The U.S. President's Working Group on Digital Asset Markets and proposed legislation like the CLARITY Act further aim to clarify jurisdictional boundaries between the SEC and CFTC, according to regulatory analysis.

Critics of DATs, including MSCI, argue that companies with digital assets constituting 50% or more of total assets should be reclassified as fund-like entities, thereby excluding them from indices like the MSCI Global Investable Market Indexes according to index provider guidelines. This threshold-based approach, however, overlooks the operational complexity of DATs. Unlike passive funds, DATs engage in active portfolio management, deploying derivatives, staking, and lending to generate alpha according to industry insights. Excluding them risks distorting index neutrality by prioritizing balance-sheet metrics over fundamental business models, according to market analysis.

Market Neutrality and the S&P 500 Inclusion Effect

The debate over DAT inclusion in indices must also consider historical precedents. The S&P 500 has long demonstrated a "rebalancing effect," where companies added to the index often experience significant price appreciation on announcement days. For instance, Block and Datadog saw double-digit gains following their 2025 inclusions, driven by retail and institutional demand for benchmark-aligned assets according to market data. This phenomenon underscores the importance of index neutrality: excluding viable companies based on arbitrary thresholds could artificially suppress liquidity and misprice assets.

DATs, by contrast, offer a unique value proposition. Their performance in Q3 2025 outpaced traditional crypto indices, with Ethereum (ETH) rising 65% and Solana (SOL) gaining 32%. The CoinDesk 20 (CD20) and CoinDesk 100 (CD100) indices, which include altcoins, recorded quarterly returns of 30.8% and 27.8%, respectively, outperforming Bitcoin's 27% according to quarterly reports. DATs, which often hold diversified portfolios of digital assets, could serve as a bridge between traditional indices and the crypto market, mitigating the risks of overconcentration in BTC.

Investor Access and the Role of Institutional Infrastructure

Excluding DATs from major indices would have profound implications for investor access. According to market analysis, MSCI's proposed rule could disqualify 142 publicly traded companies holding $137.3 billion in digital assets, effectively cutting them off from $15 trillion in passive investment capital tied to its benchmarks. This exclusion would disproportionately impact institutional investors with compliance constraints that prevent direct token ownership or exposure to unregulated crypto ETFs. DATs, with their SEC-regulated structure and institutional-grade custody solutions, according to industry reports provide a viable alternative.

Moreover, the growth of DATs has spurred innovation in market infrastructure. Custodians, prime brokers, and risk management platforms now offer tailored services to mitigate counterparty and settlement risks, enhancing confidence among institutional investors according to market analysis. For example, companies like Bitwave and JPMorgan have developed enterprise-grade tools to support DAT operations, according to industry insights.

Conclusion: A Balanced Approach to Index Evolution

The inclusion of DATs in major indices is not merely a technical decision but a strategic one that reflects the evolving nature of capital markets. While index providers must address concerns about volatility and structural fragility-such as the risk of market-adjusted net asset value (mNAV) falling below 1 during downturns according to market analysis-a blanket exclusion based on asset composition thresholds risks stifling innovation. Instead, index methodologies should evolve to recognize the operational and regulatory distinctions between DATs and passive funds, ensuring that market neutrality is preserved without undermining investor access.

As the financial system integrates digital assets, DATs represent a critical bridge between traditional and decentralized finance. Their exclusion from indices would not only limit liquidity but also hinder the broader adoption of crypto as a legitimate asset class. A more nuanced approach-one that accounts for governance, transparency, and active management-would better serve the interests of investors, corporates, and the market as a whole.