Turning danger into safety? MSCI temporarily delays expulsion of digital asset treasury companies, Strategy stock price surges 5% after hours

Global leading index provider MSCI announced on Tuesday that it will temporarily suspend the implementation of a proposal that could potentially remove digital asset treasury companies from its global indices. This means that companies like Strategy, which hold over $60 billion worth of Bitcoin, can remain in the “club” for the time being. The move caused Strategy’s stock price to rise about 5% in after-hours trading, recovering from the day’s decline. The decision temporarily alleviated market concerns over billions of dollars in passive funds potentially flowing out, but MSCI also stated that it will initiate a broader review of “non-operating companies,” laying the groundwork for future potential rule adjustments.

MSCI’s Suspension: A Pause in the Index Inclusion Qualification Tug-of-War

For investors closely watching the intersection of cryptocurrencies and traditional finance, the MSCI index qualification review wave in early 2026 is undoubtedly a tense and exciting tug-of-war. On Tuesday, this battle reached a staged pause: MSCI officially declared that, for so-called digital asset treasury companies, the “current” index treatment will remain unchanged “for now.” This decision directly addresses a radical proposal made last October, which suggested removing companies with more than 50% of their assets on their balance sheets in digital assets—referred to as DATCOs—from MSCI’s global investable market index series.

The root of this review can be traced back to MSCI’s adherence to its fundamental principles of index composition. The company’s core concern is that companies like Strategy and BitMine seem to engage more in passive investment activities rather than traditional operational businesses. According to MSCI’s index rules, investment companies themselves are not eligible for inclusion in mainstream stock indices. Therefore, in its October consultation document, MSCI proposed a “one-size-fits-all” cutoff: companies with over 50% of their total assets in digital assets would be excluded. This standard directly put dozens of companies, including Strategy, on a potential removal list.

Market reactions to this proposal were swift and intense. As the largest digital asset treasury company, Strategy’s stock has endured significant pressure over the past year, declining nearly 60%. If MSCI or other major indices like Nasdaq 100 and MSCI US Index were to exclude it, ETFs and institutional investors tracking these indices would be forced to sell its shares. JPMorgan analysts warned that just MSCI’s exclusion could lead to up to $2.8 billion in passive fund outflows from Strategy. If other index providers follow suit, the outflows could be even more staggering. Therefore, the “pause” announced on Tuesday caused Strategy’s stock to rise about 4.36% in after-hours trading, reversing a 4% decline during the day, and market relief was evident.

However, MSCI’s statement was cautious, leaving ample room for maneuver. It explicitly stated, “For now, in MSCI’s preliminary list, companies classified as DATCOs with digital asset holdings of 50% or more of their total assets will maintain their current index treatment.” The words “for now” and “current” clearly indicate that this is not a final ruling but a strategic pause. MSCI acknowledged the need for further consultation with market participants to distinguish purely investment companies from those that hold digital assets as a core part of their operations. Christopher Harvey, Head of Equity and Portfolio Strategy at CIBC Capital Markets, succinctly commented: “They are leaving it for now. But MSCI hasn’t closed the door.”

Crisis and Turning Point: The Key Node in the Strategy Defense

• Proposal Release Date: October 2025, MSCI initiated consultation proposing to exclude DATCOs.
• Review Standard: Digital assets ≥ 50% of total assets.
• Potential Affected Companies: Out of 39 companies classified as DATCOs, 18 are already MSCI index constituents facing potential removal; the rest will lose future inclusion eligibility.
• Key Opposition: A 12-page letter signed by Strategy Chairman Michael Saylor, calling the standard “arbitrary,” “misleading,” and “harmful.”
• Fund Outflow Risk (JPMorgan estimate): Just MSCI’s exclusion could cause up to $2.8 billion in passive fund outflows from Strategy.
• Immediate Market Reaction: After the announcement, Strategy’s stock rose about 5% in after-hours trading, recouping intra-day losses.

The Survival Defense of DATCOs: Investment Tools or Operating Companies?

MSCI’s suspension decision was not due to a change in its initial judgment but was driven by market feedback prompting it to pause and reassess this complex emerging category. MSCI admitted in its statement that feedback “highlighted concerns from institutional investors that some DATCOs exhibit characteristics similar to investment funds.” But at the same time, the feedback also pointed out that simply classifying these companies as investment entities might be too crude, ignoring their unique business models.

The core figure in this debate, Strategy’s co-founder and chairman Michael Saylor, has become the most vigorous defender. In his lengthy 12-page opposition letter submitted to MSCI last December, Saylor constructed a logically rigorous argument. First, he criticized the 50% threshold as “arbitrary,” noting it “singles out digital asset businesses for special unfavorable treatment.” Saylor questioned why companies with balance sheets filled with oil reserves, timber assets, or gold are not similarly scrutinized. This contrast highlights the gap in accounting and regulatory perceptions between traditional assets and emerging digital assets.

Second, Saylor emphasized the “operational” nature of Strategy’s business. He believes that the company’s acquisition, holding, and security of Bitcoin constitute a complex, proactive strategic operation rather than passive investment. This includes developing financial strategies related to R&D, creating enterprise-level software solutions for the Bitcoin network (despite the small proportion of revenue from this segment), and building a complete Bitcoin ecosystem. Saylor claims, “No passive vehicle or holding company can do what we are doing. The index classification does not define us.” His argument aims to detach Strategy from the “investment company” framework and reposition it as an innovative tech-operating company with Bitcoin as a core strategic asset.

Another Bitcoin treasury company, Strive, also joined the fight. Founded by former U.S. presidential candidate Vivek Ramaswamy, the company issued a public letter with similar views. Strive’s Chairman and CEO Matt Cole called Tuesday’s decision a “huge victory,” especially given the unfavorable “odds” for them. The collective defense of these companies successfully conveyed to MSCI and the market that DATCOs are a unique, unprecedented business model that cannot be simply shoehorned into old classification frameworks. Different accounting standards worldwide for cryptocurrencies (such as US fair value measurement) also make MSCI’s proposed global threshold methodologically flawed and difficult to implement fairly.

Market Impact: Short-term Relief and Long-term Uncertainty

MSCI’s suspension provides Strategy and similar companies with valuable breathing room, with immediate and multi-layered market effects. The most direct impact is on stock prices. After a year of decline, any news that might prevent massive passive selling is a strong positive. The 5% after-hours increase, while not reversing the long-term downtrend, signals that index inclusion is a key pillar supporting these companies’ valuations. Once this pillar is pulled away, their stock prices could face deeper discounts relative to their Bitcoin holdings’ net asset value.

For investors holding these stocks, especially those trading them as Bitcoin “stock proxies,” short-term uncertainty is reduced. They do not need to immediately face a non-fundamental-driven sell-off triggered by index rebalancing. This also buys time for companies like Strategy to continue articulating their narrative and possibly make business adjustments (though limited) to blur the line of “investment company.” However, the long-term shadow remains. MSCI explicitly stated it will initiate a broader review of “non-operating companies,” implying that future more detailed and possibly stricter evaluation standards may be introduced. DATCOs are likely still key targets for scrutiny.

From the broader crypto equity market perspective, this matter is a directional indicator. DATCOs were among the hottest concepts in the public markets, with soaring stock prices attracting notable investors from Peter Thiel to the Trump family. But as the crypto market entered a correction phase, most of these companies’ stock prices fell sharply, with many trading below their Bitcoin holdings’ value—i.e., at a “net asset value discount.” MSCI’s review, regardless of the outcome, forces traditional finance to seriously consider how to price and classify these hybrid entities. It exposes the lag and discomfort of existing financial frameworks in accommodating crypto-native business models.

For index investors and related ETF products, MSCI’s cautious stance maintains the principle of “index neutrality.” Critics warned that hastily removing DATCOs could distort markets and set a dangerous precedent based on asset class preferences rather than objective financial metrics. The suspension means funds tracking MSCI indices will continue to allocate weights to these companies as before, maintaining capital allocation continuity and predictability. However, the upcoming “broader review” is like a sword of Damocles, reminding all market participants that the debate over defining company essence is far from over, and the final rule reshaping could bring deeper market structural changes.

Future Outlook: Broader Reviews and the Financial Identity Dilemma of Crypto Assets

MSCI’s Tuesday statement is less of an endpoint and more of a new phase. The company announced it will initiate broader consultations on “how to generally treat non-operating companies” and may develop new “assessment standards,” such as based on financial statements or other metrics, to determine whether DATCOs qualify for “index inclusion.” This broadens the scope: it is no longer just about cryptocurrencies but about all entities whose main business appears non-operational and asset-oriented. DATCOs are just a prominent subset of this larger challenge.

This suggests that future scenarios may involve MSCI and its competitors collaborating to develop a new classification and screening framework. This framework might no longer rely solely on a single asset ratio threshold but consider multiple factors such as revenue sources, asset liquidity, management’s strategic focus, and whether holdings serve clear operational goals. For example, a jewelry manufacturer holding large amounts of gold as raw material reserves should be distinguished from a pure gold ETF trading company. Similarly, the same logic will be applied to differentiate “tech companies holding Bitcoin as strategic reserves” from “Bitcoin-themed funds” in the future.

This discussion touches on the fundamental identity dilemma of crypto assets within traditional finance. Is Bitcoin a storable “digital commodity” or a “financial investment product”? If viewed as the former, companies holding it in large quantities might be akin to resource companies; if as the latter, these companies are undeniably investment firms. Currently, the chaotic global accounting standards (e.g., US allows fair value measurement, while other regions may require cost-based impairment) further complicate classification. MSCI’s hesitation reflects this macro dilemma’s real impact at the micro index construction level.

For DATCOs themselves, the future path is becoming clearer: they must work harder to prove to the market that they are not just transparent shells for their underlying crypto assets. This means developing genuinely independent, cash-flow-generating operational businesses (crypto-related or not), or building an indisputable value-added service ecosystem deeply tied to cryptocurrencies. Otherwise, in the next round of index rule revisions, they may again face reclassification and exclusion risks. Michael Saylor and his peers have won the first round, but the referees have made it clear that the rules may be changed, and they must prepare to adapt to new standards.

What is a Digital Asset Treasury Company?

Digital asset treasury companies typically refer to publicly listed firms that hold large amounts of cryptocurrencies (mainly Bitcoin, followed by Ethereum) as their primary assets on the balance sheet. Their business model has undergone a fundamental shift: from traditional product/service operations to allocating significant company capital into digital assets to achieve asset appreciation, often positioning themselves as a convenient “stock proxy” for investors to access these assets.

The most representative is Strategy. Originally an enterprise software company, since 2020 it has begun converting large cash reserves into Bitcoin, with its Bitcoin holdings’ market value far exceeding its traditional software business valuation. Similar models have been adopted by other companies, forming the so-called “DATCO” group. Their stock performance is highly correlated with Bitcoin prices but often more volatile, and may show premiums or discounts relative to their Bitcoin net asset value due to company structure, financing costs, and management strategies. Investing in such companies is akin to investing in “Bitcoin + management team and strategy,” with different risk-return characteristics from traditional stocks or direct crypto holdings.