Michael Saylor's Strategy faces potential removal from MSCI's global equity indexes under new rules adopted on Thursday, threatening billions of dollars in passive investment in the bitcoin buyer.
Shares of Strategy, the world's biggest corporate bitcoin holder and a constituent of the MSCI USA and MSCI World indexes, fell 4.2% on Friday.
MSCI said on Thursday that non-operating companies will be ineligible for its Global Investable Market Indexes from the close of November 30, as part of its November index review. It will publish the final list of affected companies on November 11.
The decision follows a review MSCI began a year ago, when it proposed excluding digital asset treasury companies on the grounds that they resemble investment funds, which are already barred from its indexes. MSCI deferred that plan in January and opened a broader review on all non-operating companies.
MSCI defines non-operating companies as investment funds and business development companies, and other companies whose finances make them look like one. Strategy and Japan's Metaplanet are on MSCI's list of potential deletions. SharpLink and several other crypto treasury companies are on a watchlist for possible removal.
Index inclusion matters to companies such as Strategy because passive funds and other investors tracking benchmarks are required to hold their shares. The company warned last year that an exclusion would result in $2.8 billion of its stock being liquidated and would "chill" the industry. Strategy holds 848,250 bitcoin, according to market data cited in crypto-industry coverage of the decision.
Strategy did not immediately respond to a Reuters request for comment. Its removal is not yet final.