Original | Odaily Planet Daily (@OdailyChina)

Author | Asher (@Asher_0210)

Three crypto treasury companies ultimately failed to maintain their MSCI index eligibility.

In the early hours of today, MSCI announced the results of the November 2026 index review, with Strategy, Metaplanet, and the crypto treasury company Upexi being removed, and the relevant adjustments will take effect after the market closes on November 30. Among them, Strategy will exit the MSCI USA Index, Metaplanet will exit the MSCI Japan Small-Cap Index, and Upexi will exit the MSCI US Micro-Cap Index. All three crypto treasury companies had previously been on the potential deletion list and are now officially confirmed to be out.

Months of opposition did not change the outcome. Do treasury companies that mainly expand through financing and holding tokens count as operating enterprises or investment tools? MSCI's implementation of the new framework for "non-operating companies" has delineated the boundaries of this dispute.

Three Exits, MSCI Defines the Boundaries of "Operating Companies"

This removal is the result of MSCI’s new framework for "non-operating companies." Last year, MSCI proposed to exclude treasury companies with digital assets accounting for 50% or more of total assets from relevant indices. In January this year, this plan was not yet implemented, and the review was subsequently expanded to "non-operating companies" across different asset categories. On October 15, MSCI announced the adoption of the new framework, which will be executed along with the November index review.

The new framework first checks operating assets and then combines various indicators such as operating expenses, operating cash flow, fair value changes, and dependence on external financing to determine whether a company is more like an investment tool. Existing constituent stocks that fail to pass the screening in both of the last two annual reporting periods will be deleted. For treasury companies, retaining businesses like software, hotels, or consumer goods may not be sufficient to maintain index eligibility. If a company's assets are primarily tokens, its financial performance fluctuates mainly with token prices, and expansion relies on external financing, existing business may not be enough to change the screening outcome.

Ultimately, Strategy, Metaplanet, and Upexi all failed to maintain index eligibility, while the ETH treasury company SharpLink remains on the watch list and is not included in this removal. This time not all DATs are out simultaneously, but other treasury companies cannot guarantee allocation in mainstream indices solely by continuously increasing their token holdings.

Three Treasury Companies Face Passive Adjustment Selling Pressure

After the removal of the three companies, funds tracking the relevant indices will need to adjust their holdings, which directly reduces demand for their stocks. Among them, the potential selling pressure from Strategy is the most noteworthy. The company disclosed in a previous consultation response that funds tracking the MSCI Global Investable Market Index (GIMI) hold approximately 13 million shares of MSTR, accounting for 3.1% of its basic capital. Based on the closing price of $121.07 on November 10, the market value of this portion of stock is approximately $1.57 billion.

JPMorgan predicted last year that Strategy’s removal from MSCI could trigger about $2.8 billion in selling, which could increase to around $8.8 billion if other major index providers follow suit. Although the potential selling pressure has attracted market attention, Strategy remains relatively calm about the impact of this adjustment. The company emphasizes that the aforementioned 13 million shares only account for about 60% of its 30-day average daily trading volume, so it believes the adjustment will not have a significant impact on itself. However, having a holdings lower than a single day's trading volume may indicate the trading activity of the stock, but it is not sufficient to judge the impact of the adjustment on the stock price.

Metaplanet and Upexi also face pressure from relevant funds withdrawing, but the actual selling pressure depends on their respective fund holdings and stock liquidity, which cannot be compared to Strategy's scale. Metaplanet CEO Simon Gerovich has stated that this adjustment will not have a significant impact on the company's business or Bitcoin strategy; Upexi has not publicly commented on this removal yet.

Even if the adjustment selling pressure gradually dissipates, the impact of reduced stock demand will still persist. After exiting the relevant indices, these funds will not need to buy stocks of the three companies in accordance with their original weights, even if they receive new subscription funds. In addition to a one-time sell-off, the three companies have also lost a portion of ongoing passive buying.

Can Financing to Buy Tokens Still Work?

The reduction in passive buying could also affect treasury companies' ability to finance further increases. These companies can continue to increase their crypto assets largely due to stock premiums. When the stock price exceeds the net asset value per share, the company can raise funds by issuing new shares, allowing the purchased assets to offset the dilution from capital expansion and increase the corresponding holdings per share. Investors are willing to pay a premium because they expect the company to accumulate more assets for each share through subsequent increases.

Once the premium narrows, the same amount of funds needed for increasing holdings requires issuing more new shares. If the stock price has already fallen below the net asset value per share, continuing to issue new shares may also dilute the net asset value per share for existing shareholders, thus limiting the space for financing increases.

The MSCI removal will not directly force the three companies to sell crypto assets, but with the reduction of passive buying, maintaining stock premium may become more difficult. If stock prices continue to face pressure, companies will have to choose between slowing down their increases and accepting harsher financing terms. The past model of financing through premiums and attracting investors through increases will also become increasingly difficult to maintain.

Whether financing to buy tokens can continue will depend on how much return increases can bring to shareholders. If the amount of crypto assets held by the company increases but the corresponding asset per share for shareholders does not, the next round of financing will find it hard to entice investors.

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