Filings published Wednesday confirm that MSCI will remove Bitcoin-focused treasury firm Strategy (MSTR) from its USA Index and Metaplanet (3350.T) from its Japan Small Cap Index, effective as of the close of business on November 30.

Many market watchers anticipated the delistings following MSCI’s adoption of stricter eligibility criteria for non-operating entities last month, which put several digital asset treasury firms at risk of exclusion. However, Ethereum treasury company Sharplink survived the November small-cap review.

At the moment, some expect that Strategy and Metaplanet could see investors pull money out of their shares as funds adjust their positions following the index exclusion. According to Strategy’s filing, passive funds tracking MSCI indexes own nearly $3 billion in MSTR shares, representing more than 3% of the company’s outstanding stock.

The potential impact could extend further if other index providers follow MSCI’s lead. J.P. Morgan had previously estimated that such a move could trigger outflows of up to $8.8 billion from Strategy shares.

MSCI had included several firms in its watchlist

MSCI’s decision to delist the two companies follows its introduction of a revised methodology that excludes non-operating businesses from its indexes. One of the main factors it considers when determining whether a company qualifies as non-operating is whether it incurs substantial ongoing operating expenses. The criteria apply to companies whose digital asset holdings or similar investments account for 50% or more of their total assets.

For Strategy, it still has a large proportion of Bitcoin on its balance sheet due to its significant holdings. Metaplanet also follows a similar model, operating primarily as a Bitcoin treasury company. Per MSCI’s rule change, these companies thus resemble an investment fund more than a conventional operating business.

Earlier, when MSCI made the rule change, it included Sharplink, Cypherpunk, and Defi Dev Corp. on its watchlist. Back then, it warned that companies would be cut from its indexes if they failed this screening over their two most recent annual filing periods, remarks that did not sit right with Strategy.

Strategy’s top executives, Michael Saylor and Phong Le, had previously spoken out against the change, slamming the treatment of digital asset treasuries as “discriminatory.” In a September letter, the firm brushed off the business impact of an index exit, warning instead that the move would hurt MSCI’s reputation for neutrality. 

Strategy’s stock declined after MSCI announcement

Strategy’s stock is taking a hit in after-hours trading after MSCI announced it’s removing the Bitcoin treasury company from its global indexes.

According to TradingView, MSTR is trading near $118—a drop of more than 3%—extending its slide to more than 4% for the week and 20% over the past month. This latest dip also pushes MSTR down over 22% year-to-date—a sharp turnaround from just a couple of months ago, when the stock surged alongside Bitcoin’s rally past $80,000. 

Before MSCI’s announcement, Strategy had reiterated its commitment to expanding its Bitcoin holdings. In the week leading up to November 8, the firm raised $283.8 million through the sale of approximately 2.05 million MSTR common shares under its at-the-market offering program.

Of the proceeds, $188.3 million was used to repurchase 1.89 million STRC preferred shares, while another $81.9 million was used to acquire 1,036 Bitcoin. The remaining $13.6 million was retained as cash. Overall, since October began, the company has invested about $1.06 billion in STRC share buybacks, nearly five times its $219.7 million Bitcoin purchases. 

Similarly, Metaplanet increased its Bitcoin holdings by another 2,823 BTC in Q2, bringing total reserves to 43,000 BTC and putting it in third place as the world’s largest corporate Bitcoin holder. The company spent $170.7 million on the purchase, with its Bitcoin portfolio valued at about $2.6 billion on June 30th.

More recently, the firm has partnered with BTC Inc. to introduce Bitcoin Japan, the newest event in The Bitcoin Conference series. Billed as Japan’s first flagship Bitcoin conference, the event will offer sessions in both Japanese and English. 

“Japan is becoming one of Bitcoin’s global hubs, and it’s time for the world to see it, said Simon Gerovich, CEO of Metaplanet. 

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