Introduction to MSCI’s Consultation on Digital Asset Treasury Companies
The recent consultation launched by MSCI, a leading American financial services firm, regarding “digital asset treasury companies” is particularly timely and significant. This initiative arrives amid a discernible disintegration within the mechanisms governing exposure to Bitcoin (BTC), highlighting the evolving landscape of institutional investment in cryptocurrencies.
Emergence of Institutional Channels for Bitcoin Exposure
As we anticipate developments by mid-2025, it is essential to recognize that institutional capital is being channeled into Bitcoin through three principal avenues, each of which has achieved roughly equivalent significance:
– Regulated spot Exchange-Traded Funds (ETFs) managing assets exceeding $100 billion.
– Mining operations that inherently possess embedded BTC exposure.
– A burgeoning class of public corporations whose primary operational focus has transitioned to holding cryptocurrency on their balance sheets.
MSCI’s proposal specifically addresses the third category—companies identifying as digital asset treasuries. This proposal compels a critical examination of whether these entities function as operational businesses or merely masquerade as passive investment funds.
Details of MSCI’s Proposal
The specifics of MSCI’s proposal exhibit characteristics typical of standard index maintenance. The consultancy suggests the exclusion from its Global Investable Market Indexes of any company whose digital asset holdings surpass 50% of total assets. Furthermore, MSCI has solicited feedback regarding the status of firms that self-identify as digital asset treasuries or primarily raise capital for accumulating Bitcoin.
The consultation period extends until December 31, with a subsequent decision anticipated by January 15, and implementation projected for the February 2026 review cycle.
MSCI’s Fundamental Question
At the core of this inquiry lies a pivotal question framed by MSCI: Do these stocks exhibit characteristics akin to investment funds, which are already excluded from equity benchmarks?
Market Repercussions: Analysis by JPMorgan
In response to MSCI’s proposal, JPMorgan has conducted an analytical assessment of the potential market ramifications. Their November analysis estimates Strategy’s market capitalization at approximately $59 billion, with around $9 billion attributed to passive investment vehicles tracking major indexes.
In the event that MSCI proceeds with reclassifying Strategy, an estimated $2.8 billion in passive assets would be compelled to divest. Should other index providers such as Russell follow suit, mechanical outflows could escalate to an estimated $8.8 billion, as per Barron’s projections.
This scenario represents a secondary index shock following Strategy’s prior exclusion from the S&P 500, inciting significant backlash and scrutiny towards JPMorgan over allegations of front-running, alongside calls for boycotts and short selling against the bank.
The Proxy-Stock Dilemma: A Growing Concern
The discontent surrounding this situation underscores a more profound tension regarding how Bitcoin beta integrates into traditional investment portfolios. DLA Piper’s October advisory highlighted the rapid expansion within this sector:
– By September 2025, more than 200 U.S. public companies had adopted digital asset treasury strategies.
– These entities collectively held an estimated $115 billion in cryptocurrencies and exhibited a combined equity market capitalization rising from approximately $40 billion to around $150 billion year-on-year.
Among these companies, roughly 190 were focused primarily on Bitcoin treasuries, while an additional 10 to 20 held alternative tokens. For institutional investors constrained by mandates prohibiting direct cryptocurrency holdings, these equities presented an alternative mechanism for gaining BTC exposure without violating compliance regulations.
Structural Vulnerabilities Within Digital Asset Treasuries
However, this convenience is accompanied by inherent structural vulnerabilities. Many nascent treasuries financed their acquisitions via convertible notes and private placements. Consequently, when valuations of their stock prices decline below the value of their cryptocurrency holdings, board members face increasing pressure to liquidate digital assets and repurchase shares.
In 2025 alone, digital asset treasuries allocated approximately $42.7 billion into cryptocurrencies, with $22.6 billion deployed in the third quarter. Notably, Solana-focused treasuries experienced a substantial decline in net asset value—from $3.5 billion to $2.1 billion—representing a staggering 40% drawdown, thereby setting the stage for potential forced liquidations amounting to between $4.3 billion and $6.4 billion if a modest fraction of positions unwind.
The Rise of Spot Bitcoin ETFs
Concurrently, spot Bitcoin ETFs have surpassed $100 billion in assets under management less than one year post-launch; BlackRock’s IBIT alone holds over $100 billion in BTC and approximately 6.8% of the circulating supply by late 2025. These products offer more transparent exposure without balance-sheet leverage or net asset value discount issues that plague treasury stocks.
The Transition Towards Regulated ETF Structures
MSCI’s consultation catalyzes a transition already underway whereby Bitcoin exposure shifts from treasury equities—which become forced sellers during equity valuation corrections—into regulated ETF structures. From BTC’s standpoint, this transition could either neutral or positively influence its price if ETF inflows compensate for treasury selling; conversely, for treasury stocks themselves, it undeniably represents a liquidity-negative shift.
This dynamic reinforces Bitcoin’s structural advantage as institutional products into which capital rotates are predominantly BTC-only offerings. Meanwhile, some treasuries have begun diversifying into alternative tokens such as Solana and Ethereum.
A Comprehensive Examination of Liquidity Risks
| Company | Ticker | Role in BTC Exposure | MSCI Status in DAT Review | Approximate MSCI Parent-Index Weight* | At-Risk Passive AUM (Order of Magnitude) | Liquidity Note |
|---|---|---|---|---|---|---|
| Strategy | MSTR | Digital-asset treasury BTC | Flagged as core DAT candidate | ≈ 0.02% of MSCI ACWI IMI | ≈ $2.8B MSCI-linked; up to ≈ $8–9B total | Main node for forced selling; proxy for BTC beta in equities. |
| Riot Platforms | RIOT | BTC miner / proxy stock | Listed on preliminary DAT list | Very small; fill from terminal | Hundreds of millions, not billions | Liquidity-sensitive; high ETF/thematic ownership share. |
| Marathon Digital | MARA | BTC miner / proxy stock | Listed on preliminary DAT list | Very small; fill from terminal | Hundreds of millions, not billions | Similar profile to RIOT; more volatile free float. |
| Metaplanet | 3350 | BTC treasury (Japan) | MSCI has frozen upgrades/changes | Tiny; small-cap / country index | Tens of millions | Non-US example; shows global reach of rule. |
| Capital B and other DATs | Various | BTC-heavy DATs / miners | On wider 30–40 name DAT watchlist | Tiny individually | Collective “long tail” liquidity risk. |
The Impact on Liquidity Dynamics and Market Structure
The mechanical flows from equity markets are straightforward; index funds benchmarked to MSCI cannot substitute Strategy with a Bitcoin ETF but must rotate into whatever fills the index vacancy. From Bitcoin’s perspective, this situation constitutes an equity-liquidity shock rather than an automatic coin-selling event; however, the secondary effects are more consequential.
Treasury companies grappling with diminished equity support and constricted funding conditions will either curtail future acquisitions or may be compelled to liquidate holdings to stabilize their balance sheets. Strategy has indicated it will refrain from selling BTC to remain beneath any defined threshold; instead, it is rebranding itself as a “Bitcoin-backed structured finance company,” reinforcing its identity as an operating business rather than merely a fund.
This option may not be available to smaller treasuries with weaker financial standings.
The Future Implications for Indexing and Ownership Concentration
No formal consultations related to digital asset treasuries have been initiated by Russell or FTSE Russell; however, JPMorgan’s projected outflow scenario presumes that other major providers will eventually emulate MSCI’s classification approach over time. While FTSE Russell remains actively engaged in digital asset indexing from a token perspective, its equity methodology has yet to delineate treasuries as a distinct category; they continue to be regarded within traditional sector classifications.
DLA Piper’s advisory serves as an alert that regulators and gatekeepers—including indexers—are scrutinizing treasury disclosures with increasing diligence. This scrutiny bolsters the likelihood of a broader replication of MSCI’s measures even if not yet initiated.
The Fundamental Question: Where Does Bitcoin Belong?
The crux of MSCI’s consultation compels institutions to grapple with whether Bitcoin should occupy positions within equity benchmarks or be relegated solely to dedicated cryptocurrency products. While this consultation is methodologically grounded, its implications are fundamentally structural: it will dictate whether BTC beta resides within ETFs alongside select large corporate treasuries or disperses across a network of smaller balance-sheet holders who may face liquidation pressures during market downturns.
The resolution to this inquiry will not only redefine index weights but will also substantially impact the concentration dynamics surrounding Bitcoin ownership itself.
