MSCI temporarily lifts ban! MicroStrategy surges 5% after hours, Bitcoin-related stocks escape unscathed

MSCI temporarily does not remove the digital asset universe (DAT) from its indices, and MicroStrategy (MSTR) rose 4.36% after hours. MSCI’s proposal in October to exclude companies with over 50% digital asset exposure faced backlash. Currently, it states that the handling of DAT companies remains unchanged for the time being, but reviews will continue.

Three Months of Turmoil Behind MicroStrategy’s Rebound

MSCI’s decision ends months of uncertainty surrounding cryptocurrency-related stocks. In October, MSCI announced it was reviewing whether DAT should remain part of its Global Investable Market Index (GIMI) before the February rebalancing event. GIMI is a broad set of stock market benchmarks that serve as a barometer for institutional capital allocation and are tracked by hundreds of billions of dollars in passive funds.

MSCI stated in a Tuesday announcement: “Currently, the treatment of those digital assets listed in the preliminary list published by MSCI, where holdings in DAT companies account for 50% or more of their total assets, will remain unchanged.” This means that 18 companies, including MicroStrategy, which are already MSCI index constituents, temporarily avoid being removed.

JPMorgan had warned that if MSCI and other major indices (such as the Nasdaq 100, MSCI USA, and MSCI World) exclude MicroStrategy, the company could face billions of dollars in outflows. The mechanical selling pressure from passive funds could severely impact MicroStrategy’s stock price and affect its ability to continue buying Bitcoin.

MSCI’s Core Concerns and Industry Counterattacks

MSCI’s main concern is that digital assets like MicroStrategy’s are more akin to passive investment funds, thus “not meeting the inclusion criteria” for its indices. To align with traditional fund classifications, MSCI proposed a one-size-fits-all rule in October, excluding companies with digital assets on their balance sheets exceeding or equal to 50%. Of the 39 companies classified as DAT, about 18 are already MSCI index constituents and face potential removal.

Three Main Industry Objections

Arbitrary Threshold: The 50% cutoff lacks theoretical basis—why not 40% or 60%? This one-size-fits-all rule ignores the actual business models of companies.

Accounting Standards Variance: Different jurisdictions report cryptocurrencies under varying accounting standards, leading to inconsistent global results and making it difficult to fairly enforce a uniform standard.

Deviation from Index Neutrality: Critics argue that if approved, MSCI’s new standard would “deviate from index neutrality,” introducing subjective judgment rather than reflecting objective market performance.

MicroStrategy Chairman Michael Saylor has strongly defended the company, stating that its Bitcoin acquisitions are core to its business. “No passive fund or holding company can do what we are doing. Index classification does not define us,” Saylor previously said. MicroStrategy is not merely holding Bitcoin in anticipation of appreciation but actively increasing its holdings through innovative financing strategies (including convertible bonds and preferred stock). This active management fundamentally differs from passive funds.

MSCI Pauses but Does Not Abandon Review

Although MSCI has decided not to immediately exclude DAT companies, its review “confirmed concerns among institutional investors that some DAT companies exhibit characteristics similar to investment funds, which do not meet MSCI inclusion criteria.” MSCI said it will conduct a broader review of “general non-operating companies” and may develop new “assessment standards, such as based on financial statements or other indicators,” to determine whether DAT qualifies for index inclusion.

The company added: “This broader review aims to ensure alignment with MSCI’s overall objectives, which are to measure the performance of operating companies and exclude entities primarily engaged in investment activities.” MSCI stated: “Distinguishing between investment companies and other companies holding non-operating assets (such as digital assets), and considering them as part of core business rather than for investment purposes, requires further research and consultation with market participants.”

MSCI said it will continue communicating with market participants and evaluate whether new “assessment standards” are needed. Companies currently included in MSCI indices that are DAT will remain so, provided they continue to meet all other inclusion criteria. This means MicroStrategy and other Bitcoin-related stocks still face potential future review pressure, but at least they have avoided immediate removal in the short term.

For investors, this temporary pause offers short-term positive signals, but long-term uncertainty remains. Companies like MicroStrategy need to actively communicate during future consultations to demonstrate that their business models differ fundamentally from passive investment funds to secure their long-term position in major indices.