Index Exclusion Risks and Crypto-Backed Firms: A Strategic Conflict with U.S. Innovation Policy

The financial markets are witnessing a pivotal clash between traditional index governance and the rapidly evolving digital asset ecosystem. MSCI's proposed rule to exclude companies with 50% or more of their assets in cryptocurrencies from its Global Investable Market Indexes has ignited a firestorm of debate, pitting institutional gatekeepers against U.S. pro-innovation policies and the crypto industry itself. This move, framed as a bid for market neutrality, risks undermining the very innovation it claims to regulate-and could have profound implications for U.S. leadership in the digital economy.

MSCI's 50% Threshold and Industry Pushback

MSCI's proposed 50% threshold for excluding digital asset treasury (DAT) companies from its indices hinges on the argument that such firms operate more like investment funds than traditional businesses according to MSCI's official statement. However, this rationale has been widely criticized as arbitrary and inconsistent with how other asset-heavy industries are treated. For instance, companies holding large reserves in oil, timber, or real estate-such as REITs-are not similarly excluded, despite comparable concentrations of non-operational assets according to financial analysts.

MicroStrategy (MSTR), the largest public DAT company, has been a vocal opponent. CEO Michael Saylor argues that DATs are active operating entities leveraging Bitcoin as a form of strategic capital, not passive speculation according to Fidelity's analysis. The firm warns that the 50% threshold could create "index whiplash," with companies fluctuating in and out of indices due to crypto's price volatility and divergent accounting standards according to The Block's reporting.

This instability, Saylor contends, would erode investor confidence and distort market representation.

Market Neutrality Claims vs. Reality

MSCI's assertion of market neutrality is further undermined by the criteria of its peers. While S&P and FTSE have not yet adopted a 50% threshold, their treatment of DATs remains inconsistent. For example, the S&P 500 has excluded MicroStrategy despite its significant Bitcoin holdings, raising questions about whether MSCI's proposed rule would exacerbate existing biases according to Barron's analysis. Meanwhile, FTSE Russell has maintained a more neutral stance, allowing DATs to remain in its indices unless they meet specific fund-like criteria according to LinkedIn commentary.

This divergence highlights a broader issue: index providers are not applying uniform standards to asset-heavy companies across sectors. As one analyst noted, "If a company holds 50% of its assets in oil, it's a diversified energy firm. If it holds 50% in Bitcoin, it's suddenly a speculative fund. That's not neutrality-it's policy bias" according to Yahoo Finance reporting.

Conflict with U.S. Pro-Crypto Policies

The tension between MSCI's proposal and U.S. pro-crypto policies has become increasingly pronounced. The Trump administration's digital asset agenda, including the Strategic Bitcoin Reserve initiative and expanded 401(k) access to crypto, explicitly aims to integrate digital assets into mainstream finance according to Bitcoin Magazine. The GENIUS Act, signed into law in July 2025, further underscores this commitment by streamlining regulatory frameworks for stablecoins and other crypto assets according to American Progress analysis.

These policies directly contradict MSCI's exclusionary approach. By cutting off DATs from trillions in passive capital, the index provider risks stifling innovation at a time when the U.S. government is actively promoting it. As JPMorgan analysts noted, excluding MicroStrategy alone could trigger $2.8 billion in passive outflows, with broader implications for the digital asset economy according to CryptoSlate reporting. This financial drag could deter institutional adoption and slow the development of new crypto-based financial instruments.

Financial and Strategic Implications

The stakes extend beyond individual firms. If implemented, MSCI's rule could create a self-fulfilling prophecy: reduced index inclusion would limit DATs' access to capital, forcing them to deleverage their crypto holdings to meet the 50% threshold. This, in turn, could depress Bitcoin's price and discourage corporate adoption-a scenario that directly undermines U.S. efforts to position itself as a global leader in digital finance according to Decrypt analysis.

Moreover, the SEC's recent approval of generic listing standards for commodity-based crypto ETFs in September 2025 signals a regulatory environment increasingly open to crypto integration according to Legal Week reporting. MSCI's exclusionary stance appears at odds with this trajectory, creating a regulatory split that could fragment market access and confuse investors.

Conclusion

MSCI's proposed index changes represent more than a technical adjustment-they are a strategic decision with far-reaching consequences. By applying a double standard to crypto-backed firms, the index provider risks alienating a sector that the U.S. government is actively trying to empower. As the deadline for a final decision looms (January 15, 2026), investors and policymakers must weigh whether market neutrality is being upheld-or whether MSCI is inadvertently stifling the innovation it claims to regulate.

The outcome of this debate will not only shape the future of DATs but also determine whether the U.S. can maintain its edge in the global digital economy. For now, the message from the crypto industry is clear: innovation thrives when it is included, not excluded.