MSCI Proposes Excluding Bitcoin Holders, Metaplanet From Indexes

MSCI, a leading provider of critical decision support tools and services for the global investment community, has initiated a consultation proposing significant changes to its index methodologies. The core of the proposal targets the exclusion of "non-operating companies" from its widely followed equity indexes. This broad category is intended to encompass entities whose primary business activities do not involve direct operations in a specific sector or industry, but rather derive value from holding assets or investments. Among the companies specifically named in the consultation paper as potentially facing exclusion are those whose business models are heavily reliant on holding Bitcoin, and Metaplanet, a company whose primary asset is also Bitcoin.

The consultation, which opened on June 14, 2024, and is set to conclude on July 12, 2024, seeks feedback from market participants on the proposed changes. The rationale behind this proposed shift, as outlined by MSCI, is to ensure that its indexes more accurately reflect the operating landscape of global equity markets. By focusing on companies with direct operational involvement, MSCI aims to provide investors with benchmarks that are more representative of traditional business activities and less influenced by asset-holding strategies that may not align with the index's original investment objectives. The exclusion of companies primarily holding Bitcoin could have a notable impact on investors tracking MSCI indexes, as it would remove exposure to this specific asset class through equity vehicles.

Metaplanet, a company that has publicly stated its strategy revolves around acquiring and holding Bitcoin as its principal treasury reserve, is a prominent example of the type of entity MSCI is considering for exclusion. Similarly, other companies whose primary function is to hold Bitcoin, often referred to as Bitcoin holders or Bitcoin-centric companies, are also under scrutiny. The consultation paper does not specify a precise threshold for Bitcoin holdings or revenue derived from Bitcoin to trigger exclusion, but it emphasizes the "non-operating" nature of such businesses. This move by MSCI reflects a broader trend in the financial industry to refine index construction and ensure greater clarity and consistency in investment products. The outcome of this consultation will be closely watched by investors and companies alike, as it could reshape how certain asset classes and investment strategies are represented within major global equity benchmarks.