The news that MSCI – one of the world’s “Big Three” index providers – is looking to exclude digital asset treasuries (DATs) from its indices 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” making a comeback in the Crypto Twitter lexicon. But 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 that track its benchmarks. As such, investor protection is an important part of their role – and they state this clearly and repeatedly in their index methodology documents. If they approve an asset for inclusion in one of their indices, it has real impact. And unfortunately, it’s questionable whether DATs really 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 company, Strategy (under the ticker MSTR) slowly moved further and further away from its core business under the leadership of Michael Saylor to essentially become a leveraged BTC play listed on the traditional stock market.
And it did really well as a result. From its first Bitcoin purchase in August 2020 to its peak in June 2025, MSTR’s share price rose 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 only 4 in 2020 to 142 in October 2025, more than half of these occurred 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 is 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 great flexibility when it comes to repayments. Some others, meanwhile, have issued secured debt — meaning they face stricter collateral requirements and have far less leeway — and on top of that bought crypto at much higher average prices.
Max pain
As a result, DATs are now hurt by the brutal crypto selloff in recent weeks. The crash nearly halved the combined market capitalization of DATs from July’s peak of $176 billion to about $99 billion in mid-November, with many now trading below their net assets (NAVs). For investors looking to buy these shares at this point in the market, this could potentially represent a discount – if they see future value, which is a big if. Meanwhile, early investors are feeling the pain as share prices of crypto treasuries fall.
Even Strategy’s shares are down 40% year-to-date, and Tom Lee’s BitMine is trading nearly 80% off its all-time high (even though shares are up nearly 300% YTD). However, Saylor and Lee have structured their vehicles well enough to have the luxury of buying the dip – which they both have. Others have not fared quite so well.
After their shares suffered a brutal sell-off, 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 tax firm ETHZilla sold $40 million in tokens, while FG Nexus was forced to sell over 10,922 ETH to buy back around 8% of its publicly traded 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 listed companies, especially so soon after launch, and clearly point to structural problems.
It really feels like we’re seeing the dominoes start to fall, and we’re not even close to a crypto winter yet. For now, this is nothing more than a relatively standard bull market correction. So it’s especially worrisome that these companies are struggling so much now — what will happen if we see something like the 2022 downturn?
As someone who closely monitors the crypto market on a daily basis, I have been concerned about the systemic risk of DAT for quite some time. So why shouldn’t MSCI be concerned about including these assets in its indexes? Its approval would signal that DATs are investable, well managed and sufficiently transparent. Conversely, excluding them suggests an unacceptable level of risk, structural problems 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 portion of crypto companies in the market today probably won’t survive a real downturn, the likes of BitMine and Strategy will almost certainly be fine. So there is an argument that MSCI is throwing the baby out with the bathwater when it comes to these companies.
Overall, however, MSCI is not wrong to be cautious about DATs. Many of them are risky vehicles that have jumped on the hype train hoping for quick wins. Excluding them from major investment indices is not indicative of some sort of coordinated attack on crypto as a whole – it’s just TradFi being cautious and seeking to protect investors.
And as crypto becomes increasingly integrated with the traditional financial ecosystem, this is part of what we will all simply have to accept. These are the growing pains that come with a big change. But in the end, these strict standards could be a blessing in disguise. Over time, they can strengthen the case for legitimate digital assets – while weeding out the risky, poorly structured businesses before they can become a systemic risk.
