MSCI’s decision to retain Digital Asset Treasury Companies (DATCOs), such as MicroStrategy, in its global equity indexes has alleviated fears of an immediate forced-selling event.
However, far from settling the debate, the ruling has exposed a deeper and increasingly contentious question: whether a company whose balance sheet is dominated by Bitcoin should be treated as an operating business or as a leveraged investment vehicle masquerading as equity.
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In an announcement released late Tuesday, MSCI said it would not proceed with a proposal to exclude DATCOs from the MSCI Global Investable Market Indexes during the February 2026 review.
At the same time, the index provider made clear that scrutiny is far from over. MSCI said it plans to open a broader consultation on “non-operating companies generally.”
On this, the provider of global equity indexes, analytics, and data cited concerns from institutional investors that some DATCOs resemble investment funds rather than traditional businesses.
For now, DATCOs already included in MSCI indexes will remain, provided they meet other eligibility criteria. However, MSCI imposed meaningful constraints.
- It will not increase the Number of Shares, Foreign Inclusion Factor, or Domestic Inclusion Factor for these securities, and
- It will defer additions or size-segment migrations.
In practical terms, that freezes their index footprint and limits future passive inflows even if companies issue new equity.
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The announcement triggered sharply divided reactions across markets. Strategy, MicroStrategy’s corporate identity, welcomed the outcome, as did Michael Saylor, the firm’s executive chair and former CEO.
According to MicroStrategy, this is a strong outcome for neutral indexing and economic reality, with supporters echoing that view.
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Critics Warn MSCI Ruling Only Postpones the MicroStrategy Reckoning
Critics, however, argue the MSCI decision merely delays a reckoning. Andy Constan described MicroStrategy as “a 1.27 times levered ETF trading at its NAV and paying 10% for its leverage.”
Constan added that the company “has no GAAP earnings,” “has no justification for being valued with a P/E,” and “should not have been added to NDX 100 and will never be added to the SPX or any ‘corporate’ index.”
Put plainly, Constan argues that MicroStrategy is not a normal company. Rather, it is more like a risky, leveraged Bitcoin fund, and treating it like a regular corporate stock is misleading.
Concerns have also intensified around Strategy’s preferred equity offerings, particularly STRC. Analyst Novacula Occami pushed back strongly against claims that these instruments represent digital credit.
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According to Occami, the structure lacks basic covenants and protections typically found in preferred securities, making it “just equity risk.”
Even some bullish observers acknowledge that the MSCI outcome is less positive than headline reactions suggest.
Analyst Finch noted that the restriction on share count adjustments means “new issuance will no longer generate incremental passive buying from index rebalancing,” removing a key tailwind for stocks like MSTR.
MSCI’s own language highlights why the debate is unresolved. By highlighting concerns that DATCOs may be predominantly investment-oriented rather than operational, the index provider indicates that the classification of Bitcoin-heavy companies remains under review.
That leaves MicroStrategy’s Bitcoin premium and its place in equity markets intact for now, but firmly under the microscope.
Source: https://beincrypto.com/msci-pauses-microstrategy-exclusion-datco-index-review/
