MSCI Rejects DATCO Exclusion, Launches Broader Review

MSCI (MSCI +0.51%) indexes are seen by many as a great way to gain exposure to markets due to their diverse holdings and past success. These funds provide insight into regional and sector-specific economic health, alongside other vital investment factors.

As such, there has been a lot of interest in how and when MSCI would address concerns surrounding the inclusion of Digital Asset Treasury Companies (DATCOs). Here’s what you need to know.

Understanding MSCI Global Investable Market Indexes

MSCI indexes are a valuable investment vehicle used by thousands of traders to help gain exposure to broad markets and regions. The indexes feature carefully curated large, mid, and small-cap stocks that include non-overlapping size segments. Additionally, the funds automatically rebalance.

Some MSCI indexes focus on global economics, while others provide exposure to emerging markets. Assets like the MSCI Global Investable Market Indexes, MSCI ACWI (All Country World Index), and the MSCI ACWI IMI (Investable Market Index) serve as reliable indicators of market conditions while enabling investors to diversify their holdings.

February 2026 Index Review

Notably, investor concerns continue to rise as the upcoming review date for MSCI index inclusion approaches for several reasons. For one, there was a lot of commotion surrounding whether MSCI would eliminate Digital Asset Treasury Companies (DATCOs) from its holdings. DATCOs are companies identified by MSCI as having digital asset holdings representing 50% or more of their total assets (based on MSCI’s preliminary list).

Companies like Strategy (MSTR -1.94%) have seen success after focusing their efforts on Bitcoin (BTC -0.88%) reserves. However, the core debate around DATCO treatment is ultimately about index methodology and whether certain entities exhibit characteristics similar to investment funds, which are not eligible for inclusion in MSCI Indexes.

Investor Concerns

These concerns eventually led to intense debate between the parties, with opponents arguing that some DATCOs resemble investment funds rather than operating companies. Conversely, Bitcoin proponents argue that excluding DATCOs penalizes firms for being innovative and could harm future development. This side of the argument believes that removing these firms from the index would cause irreparable damage to the sector and the greater economy.

Source – MSCI Chairman and Chief Executive Officer, Henry Fernandez

Specifically, there has been a lot of concern surrounding the potential ramifications of excluding firms like Strategy from the indexes. Some analysts have estimated that a forced exclusion could have triggered multi-billion-dollar passive outflows, though MSCI itself did not publish any capital flow estimates. They also cite how the decision unevenly affects certain firms based solely on their business model rather than their performance.

Decision to Retain DATCOs in Indices

Recognizing the growing tension and potential for market disruptions, MSCI has determined at this time not to implement the proposal to exclude Digital Asset Treasury Companies (DATCOs) from the MSCI Global Investable Market Indexes as part of the February 2026 Index Review. Instead, MSCI intends to open a broader consultation on the treatment of non-operating companies generally, with the goal of maintaining consistency and alignment with index objectives focused on operating companies and excluding entities whose primary activities are investment-oriented in nature.

MSCI also noted that distinguishing between investment companies and other companies that hold non-operating assets (including digital assets) as part of core operations rather than for investment purposes requires further research and consultation, and may require additional inclusion assessment criteria (including financial-statement-based or other indicators).

Temporary Index Safeguards

For the time being, the current index treatment of DATCOs identified in MSCI’s preliminary list will remain unchanged, but MSCI is applying interim safeguards during this period of broader review.

Indexing Inclusion

The news means that investors will have more time to decide what their next maneuvers should include. Thankfully, they won’t have to deal with immediate forced changes tied to the February 2026 review. Recently, the company stated that DATCOs currently included in MSCI Indexes will continue to be included, provided they continue to meet all other index inclusion requirements.

What this Means for Investors

This news was met with strong support by investors who see it as a win. Strategy and other DATCOs have been a positive force in the market, securing gains and helping to drive Bitcoin adoption and integration in the traditional financial sector.

Another major benefit of the decision is that it reduces the near-term risk of forced passive selling. Many indexes and funds passively track MSCI indexes, and an exclusion decision could have required those funds to sell affected securities. MSCI’s choice not to implement the exclusion proposal as part of the February 2026 review avoids that immediate scenario, even as a broader consultation continues.

Market Stability and Volatility Impact

The decision to avoid implementing a hard-line exclusion proposal in February 2026 helps prevent investor panic and reduces the likelihood of forced selloffs tied directly to that review cycle. It also gives MSCI more time to research how to consistently distinguish operating companies from entities whose primary activities may be investment-oriented.

DATCO and Bitcoin Proxy Stock Reaction

News of the decision was met with a positive response from investors across the stock market. Bitcoin proxies and related assets experienced a slight boost, with companies like Strategy securing gains directly following the news.

Broader Consultation

For now, the industry, and MSCI in particular, will take time to gain a broader consensus on the facts and opinions surrounding DATCO treatment and the effects of excluding such entities from indexes. This stage will include conducting comprehensive reviews covering potential disruptions and risks, as well as considering additional criteria that may be needed to assess eligibility across entities with predominantly investment-oriented activities.

Future of Bitcoin Treasury Companies (DATCOs)

Given the growing number of firms pivoting towards Bitcoin reserves, this decision will help to dictate the future of the crypto market in several ways. For one, if MSCI continues to include DATCOs like Strategy under current rules, it will signal to other market participants that these models can remain index-eligible—at least under today’s inclusion framework—while the broader consultation proceeds.

Boost Crypto Investment

A positive long-term outcome could give other companies the confidence to pursue Bitcoin treasury models and accumulation strategies. This maneuver could help boost Bitcoin demand and drive prices, alongside treasury values upward, inspiring more participation as time progresses and Bitcoin continues to expand its market penetration and user base.

Investing in DATCOs

Of all the companies that would be affected by any future methodology revisions, Strategy, the world’s largest corporate Bitcoin treasury operator, would have faced the biggest near-term mechanical impacts if the exclusion proposal had been implemented in February 2026. Strategy (formerly MicroStrategy) has been a strong advocate for Bitcoin ever since its Executive Chairman, Michael Saylor, decided to pivot towards Bitcoin reserves.

Strategy’s stock bounced back after weeks of strong downward pressure directly related to concerns regarding potential index exclusion. The latest market movements show how sell-off concerns were looming as the news was reflected in investor relief.

Notably, Strategy isn’t alone in its pivot towards Bitcoin reserves, and this latest development could be seen as a step towards renewed confidence in crypto-related investment vehicles and treasury models. However, it is still too soon to determine what the final outcome will be once MSCI’s broader consultation on non-operating, investment-oriented entities concludes.

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