– How might the exclusion of crypto treasuries affect the cryptocurrency market?

MSCI Index Set to Exclude Crypto Treasuries, Warns Industry Executive

Rumors are swirling across institutional desks: an industry executive has warned that MSCI could move to exclude companies with material “crypto treasuries” from certain indices. While MSCI has not issued a public rule change or blanket prohibition as of November 2025, the prospect matters. MSCI’s equity indices anchor asset allocation for trillions of dollars in benchmarked capital; a methodology tweak touching corporate crypto holdings could ripple through passive flows, factor strategies, and mandate compliance.

What “Crypto Treasuries” Mean-and Why They’re in the Crosshairs

In this context, “crypto treasuries” typically refers to significant balance-sheet holdings of crypto assets (for example, Bitcoin or Ether) that are not core to a company’s operating business. Think corporate reserves, strategic treasury positions, or tokens held outside day-to-day operations. It does not necessarily include pure-play crypto businesses (exchanges, miners, custodians) whose operating assets are inherently crypto-related, though any policy would need to specify scope.

Accounting and disclosure context

• US GAAP: In 2023, the FASB approved fair value accounting for certain crypto assets, enabling companies (from 2024/2025 reporting seasons onward) to carry qualifying crypto at fair value with gains/losses in earnings. This increased transparency but also surfaced volatility.
• IFRS: Crypto is typically treated as an intangible asset; the revaluation model can apply if an active market exists, but many firms still use cost less impairment. Measurement diversity complicates comparability across jurisdictions.
• Risk controls: Custody, cold storage, audit assurance, and concentration disclosure materially affect investor confidence and risk ratings.

Has MSCI Announced an Exclusion? Current Status

As of November 2025, MSCI has not publicly announced a blanket exclusion of companies solely due to holding crypto in treasury. However:

• MSCI routinely creates specialized, rules-based variants-factor, ESG, climate, and thematic indices-with client-driven exclusions (e.g., business involvement screens).
• A targeted screen (for example, excluding companies with “material non-operational digital asset holdings”) could be introduced in bespoke or broad index families after standard consultations.
• Industry executives warning of a potential exclusion are highlighting a real possibility rather than confirming an implemented rule.

Bottom line: No official change yet, but the door is open for a rule in specific index families, especially where regulatory, volatility, or governance risks are a concern for benchmark users.

Potential Market Impact if Crypto Treasuries Are Screened

• Passive flow shifts: If constituents are removed from any widely tracked MSCI index, passive vehicles benchmarked to that index would need to rebalance, potentially increasing volatility and spreads in affected names.
• Cost of capital: Exclusion risk can widen equity risk premia and raise financing costs for issuers with large non-operating crypto stacks.
• Portfolio construction: Fundamental and factor managers running index-relative risk may trim exposures preemptively if consultation language signals likely implementation.
• Signaling to corporates: Boards considering Bitcoin or token reserves could face new governance hurdles, policy limits, or shareholder pushback tied to benchmark eligibility.

Methodology considerations MSCI could use

1. Materiality thresholds: Define “material” (e.g., crypto as a % of market cap, assets, or net tangible assets).
2. Scope clarity: Distinguish operating crypto inventory (exchanges, market makers) from non-operating treasury holdings.
3. Valuation and liquidity: Require observable markets, robust pricing sources, and periodic valuation controls.
4. Governance and custody: Screens tied to independent custody, multi-sig controls, insurance, and audit assurance.
5. Disclosure: Minimum quarterly transparency on positions, wallets, and risk management.

Who Could Be Affected-and How to Mitigate Risk

Corporate issuers and treasurers

• Right-size exposure: Set policy limits for non-operating crypto as a percentage of market cap or net cash.
• Hedge volatility: Consider collars or variance strategies around earnings dates to dampen P&L swings.
• Strengthen controls: Third-party, SOC-audited custody; disaster recovery; key management; segregation of duties.
• Improve disclosure: Publish wallet attestations, auditor letters, and risk frameworks; align with fair value where applicable.
• Engage index providers: Participate in consultations; provide data showing risk comparability to other treasury assets.

Crypto-native projects and DAOs

• Treasury diversification: Blend native tokens with BTC/ETH/stables to reduce correlation and drawdown.
• On-chain transparency: Real-time dashboards with proof-of-reserves, vesting schedules, and spend policies.
• Governance safeguards: Caps on discretionary sales; multi-sig with independent signers; formal risk charters.

How Crypto Investors Can Prepare

• Track consultations: Monitor MSCI methodology updates and request-for-comment windows.
• Map exposures: Identify public companies with sizable crypto treasuries and estimate passive index ownership.
• Watch flow proxies: Option skew, lending utilization, and ETF creations/redemptions can flag rotation risk.
• Diversify benchmarks: Consider mandates referencing multiple index families to reduce single-provider policy risk.
• Stress test: Model index exclusion scenarios for holdings reliant on benchmark inclusion for liquidity.

Conclusion: A Live Debate With Real Stakes

An executive warning about MSCI excluding crypto treasuries underscores a broader shift: institutional benchmarks are wrestling with how to treat balance-sheet digital assets. There is no confirmed, universal MSCI exclusion as of November 2025, but a targeted screen-especially in ESG or risk-sensitive variants-is plausible. For issuers, stronger governance and transparent, fair-value reporting can mitigate index risk. For investors, staying plugged into index consultations and proactively mapping exposure will be the edge if this policy line hardens.