The information that MSCI — one of many world’s “Large Three” index suppliers — is trying to probably exclude digital asset treasuries (DATs) from its indexes has completely scandalized the crypto neighborhood. JP Morgan mentioning this of their analysis word on Technique solely added gas to the hearth, with the time period “Operation Chokepoint” coming again into the Crypto Twitter lexicon. Nonetheless, MSCI might have a legitimate level in the case of DATs.
MSCI is among the largest index suppliers on the earth, with over $18 trillion in ETFs and institutional belongings following its benchmarks. As such, investor safety is a key a part of their function — and, certainly, they clearly and repeatedly state so of their index methodology paperwork. In the event that they approve an asset for inclusion into one among their indexes, it has actual clout. And, sadly, it’s questionable whether or not DATs actually meet these benchmarks.
The rise and fall of DATs
Till very just lately, Technique (previously MicroStrategy) was the one Bitcoin treasury sport on the town. Initially a software program enterprise, Technique (underneath the ticker MSTR) slowly transitioned additional and additional away from its core exercise underneath the management of Michael Saylor to change into, basically, a leveraged BTC play listed on the normal inventory market.
And it did rather well in consequence. From its first Bitcoin purchase in August 2020 to the height in June 2025, MSTR’s share value soared over 3,000%. It was so profitable, actually, that many different firms determined they wished a chunk of the pie. And so, this yr, the DAT development exploded — their quantity elevated from simply 4 in 2020 to 142 by October 2025, greater than half of those coming into existence this yr alone. We now even have company entities investing in tokens like DOGE, ZEC, or WLFI, whose volatility is way higher than BTC.
However that’s not the one drawback. Many of those new company entities raised funds to purchase crypto on rather more unfavorable phrases than Technique, whose unsecured convertible debt offers it an excessive amount of flexibility in the case of repayments. Some others, in the meantime, have issued secured debt — which means they face stricter collateral calls for and have far much less wiggle room — and on high of this, purchased crypto at far increased common costs.
Max ache
In consequence, DATs are actually hurting from the brutal crypto sell-off over latest weeks. The crash practically halved the mixed market cap of DATs from July’s $176 billion peak to about $99 billion in mid-November, whereas many are actually buying and selling beneath their internet asset values (NAVs). For buyers trying to purchase these shares at this level out there, this may probably symbolize a reduction — in the event that they see future worth, which is a giant if. Within the meantime, early buyers are feeling the ache, because the inventory costs of crypto treasuries tumble.
Even Technique’s shares are down 40% year-to-date, and Tom Lee’s BitMine is buying and selling practically 80% down from its all-time excessive (although shares are up practically 300% YTD). Saylor and Lee, nevertheless, have structured their automobiles effectively sufficient to have the luxurious of shopping for the dip —which each of them have been doing. Others haven’t fared fairly so effectively.
After their shares suffered brutal sell-offs, a number of DATs have already been compelled to promote their crypto holdings — virtually actually at a loss — to fund share buybacks. A number of weeks in the past, ETH treasury agency ETHZilla offered $40 million in tokens, whereas FG Nexus was compelled to promote over 10,922 ETH to re-purchase some 8% of its publicly tradable shares. Equally, in early November, BTC treasury Sequans offered 970 Bitcoin to redeem half of its convertible debt. A lot of these compelled liquidations are extremely uncommon for publicly traded firms, particularly so quickly after launch, and clearly level to structural points.
It actually appears like we’re seeing the dominoes start to fall, and we’re not even anyplace close to a crypto winter but. For now, that is not more than a comparatively commonplace bull market correction. So it’s notably regarding that these firms are hurting so badly now —what is going to occur if we see one thing extra akin to the 2022 downturn?
As somebody who intently watches the crypto market each day, I’ve been involved concerning the systemic threat of DATs for some time. So why shouldn’t MSCI be involved about together with these belongings in its indexes? Its approval would sign that DATs are investable, well-governed, and sufficiently clear. Conversely, excluding them suggests an unacceptable degree of threat, structural points, or issues about liquidity or governance. It’s straightforward to see what number of DATs fall into the latter class.
The TradFi sport
After all, not all DATs are made equal. Whereas a big proportion of crypto firms available on the market in the present day will doubtless not survive an actual downturn, the likes of BitMine and Technique will virtually actually be high quality. So there’s an argument that MSCI is throwing the newborn out with the bathwater in the case of these firms.
General, although, MSCI isn’t mistaken to be cautious on DATs. A lot of them are dangerous automobiles which have jumped on the hype prepare within the hopes of fast positive aspects. Excluding them from main funding indexes isn’t the signal of some form of coordinated assault on crypto as an entire — it is simply TradFi being cautious and trying to shield buyers.
And as crypto more and more turns into built-in with the normal monetary ecosystem, this is part of all of it of us will merely have to just accept. These are the rising pains that include a significant change. However in the long run, these stringent requirements could possibly be a blessing in disguise. Over time, they could strengthen the case for reliable digital asset treasuries – whereas removing the dangerous, badly structured companies, earlier than they’ll change into a systemic threat.