The news that MSCI — one of the world’s “Big Three” index providers — is looking to potentially exclude digital asset treasuries (DATs) from its indexes has absolutely scandalized the crypto community. JP Morgan mentioning this in their research note on Strategy only added fuel to the fire, with the term “Operation Chokepoint” coming back into the Crypto Twitter lexicon. However, MSCI may have a valid point when it comes to DATs.
MSCI is one of the largest index providers in the world, with over $18 trillion in ETFs and institutional assets following its benchmarks. As such, investor protection is a key part of their role — and, indeed, they clearly and repeatedly state so in their index methodology documents. If they approve an asset for inclusion into one of their indexes, it has real clout. And, unfortunately, it is questionable whether DATs truly meet these benchmarks.
The rise and fall of DATs
Until very recently, Strategy (formerly MicroStrategy) was the only Bitcoin treasury game in town. Originally a software business, Strategy (under the ticker MSTR) slowly transitioned further and further away from its core activity under the leadership of Michael Saylor to become, essentially, a leveraged BTC play listed on the traditional stock market.
And it did really well as a result. From its first Bitcoin buy in August 2020 to the peak in June 2025, MSTR’s share price soared over 3,000%. It was so successful, in fact, that many other companies decided they wanted a piece of the pie. And so, this year, the DAT trend exploded — their number increased from just 4 in 2020 to 142 by October 2025, more than half of these coming into existence this year alone. We now even have corporate entities investing in tokens like DOGE, ZEC, or WLFI, whose volatility is far greater than BTC.
But that’s not the only problem. Many of these new corporate entities raised funds to buy crypto on much more unfavorable terms than Strategy, whose unsecured convertible debt gives it a great deal of flexibility when it comes to repayments. Some others, meanwhile, have issued secured debt — meaning they face stricter collateral demands and have far less wiggle room — and on top of this, bought crypto at far higher average prices.
Max pain
As a result, DATs are now hurting from the brutal crypto sell-off over recent weeks. The crash nearly halved the combined market cap of DATs from July’s $176 billion peak to about $99 billion in mid-November, while many are now trading below their net asset values (NAVs). For investors looking to buy these stocks at this point in the market, this can potentially represent a discount — if they see future value, which is a big if. In the meantime, early investors are feeling the pain, as the stock prices of crypto treasuries tumble.
Even Strategy’s shares are down 40% year-to-date, and Tom Lee’s BitMine is trading nearly 80% down from its all-time high (though shares are up nearly 300% YTD). Saylor and Lee, however, have structured their vehicles well enough to have the luxury of buying the dip —which both of them have been doing. Others have not fared quite so well.
After their shares suffered brutal sell-offs, several DATs have already been forced to sell their crypto holdings — almost certainly at a loss — to fund share buybacks. A few weeks ago, ETH treasury firm ETHZilla sold $40 million in tokens, while FG Nexus was forced to sell over 10,922 ETH to re-purchase some 8% of its publicly tradable shares. Similarly, in early November, BTC treasury Sequans sold 970 Bitcoin to redeem half of its convertible debt. These types of forced liquidations are highly unusual for publicly traded companies, especially so soon after launch, and clearly point to structural issues.
It really feels like we’re seeing the dominoes begin to fall, and we’re not even anywhere near a crypto winter yet. For now, this is no more than a relatively standard bull market correction. So it’s particularly concerning that these companies are hurting so badly now —what will happen if we see something more akin to the 2022 downturn?
As someone who closely watches the crypto market on a daily basis, I have been concerned about the systemic risk of DATs for a while. So why shouldn’t MSCI be concerned about including these assets in its indexes? Its approval would signal that DATs are investable, well-governed, and sufficiently transparent. Conversely, excluding them suggests an unacceptable level of risk, structural issues, or concerns about liquidity or governance. It’s easy to see how many DATs fall into the latter category.
The TradFi game
Of course, not all DATs are made equal. While a large proportion of crypto companies on the market today will likely not survive a real downturn, the likes of BitMine and Strategy will almost certainly be fine. So there’s an argument that MSCI is throwing the baby out with the bathwater when it comes to these companies.
Overall, though, MSCI isn’t wrong to be cautious on DATs. Many of them are risky vehicles that have jumped on the hype train in the hopes of quick gains. Excluding them from major investment indexes isn’t the sign of some sort of coordinated attack on crypto as a whole — it’s just TradFi being cautious and looking to protect investors.
And as crypto increasingly becomes integrated with the traditional financial ecosystem, this is a part of it all of us will simply have to accept. These are the growing pains that come with a major change. But in the end, these stringent standards could be a blessing in disguise. Over time, they may strengthen the case for legitimate digital asset treasuries – while weeding out the risky, badly structured firms, before they can become a systemic risk.
