MSCI Tightens Index Rules As Strategy And Other Bitcoin Treasury Firms Face Fresh Scrutiny

TL;DR: MSCI has revised its methodology for classifying non-operating companies, putting Bitcoin-heavy treasury businesses under closer index scrutiny. Any possible exclusion of companies such as Strategy must be assessed against the actual screening criteria and protections for existing index constituents. One of the most important questions facing publicly listed Bitcoin treasury companies may no longer be about Bitcoin’s price. It may be about whether index providers consider them operating businesses at all. MSCI announced changes to the rules governing eligibility for its Global Investable Market Indexes on October 15. The methodology is intended to distinguish companies conducting substantial operating activities from those functioning primarily as investment vehicles. Strategy, the Michael Saylor-led business that has raised enormous sums to purchase Bitcoin, is an obvious company for investors to watch. But the new rules do not mean Strategy has already been removed from MSCI indexes. The Financial Tests That Matter Under the revised approach, balance-sheet composition is only the beginning. MSCI also examines operating and financial characteristics before determining wheth...