The Bitcoin Policy Institute released a paper detailing how MSCI’s proposed index rules could trigger billions in forced selling for firms like Strategy, Metaplanet, and Yellow Cake. Executive Director Conner Brown authored the 23-page research report, titled “Wall Street’s Invisible Committee,” which examines how private index providers wield outsized influence over trillions in passive investment capital.
Passive Index Funds and Trillions in Motion
Index funds held $21.8 trillion, or 53.9% of U.S. long-term fund assets as of July, outpacing the $18.6 trillion managed in active funds, according to data cited in the Bitcoin Policy Institute paper. By 2025, index funds owned 19% of the U.S. stock market. MSCI states that $21 trillion is benchmarked to its indexes, including $2.8 trillion in equity exchange-traded funds that track them directly.
Brown notes that index providers do not manage investor money directly, yet their adjustments force fund managers to buy or sell billions of dollars in shares. In 2025, MSCI proposed excluding companies whose digital assets represented at least 50% of total assets. JPMorgan analysts estimated that removing bitcoin treasury firm Strategy from MSCI indexes could prompt roughly $2.8 billion in selling by tracking funds, with that figure potentially climbing to $8.8 billion if other index providers followed suit.
The Shift to the Operating Assets Test
MSCI ultimately shelved its initial digital asset proposal, instead freezing share count increases and deferring new additions while drafting a broader review. Seven months later, the index provider introduced an updated framework that removes explicit references to bitcoin or digital assets. The August proposal evaluates whether a company maintains sufficient “operating assets.”
Under the revised rules, a company failing an initial 50% asset screen faces five additional financial tests. Firms that are not yet index constituents can be barred after triggering four flags. Existing constituents receive buffers, typically requiring failures during two consecutive annual reviews before removal. Brown points out that “operating assets” lacks a standardized definition under U.S. GAAP or IFRS, requiring MSCI to classify assets ranging from cash and mineral rights to intellectual property before applying its math.
https://x.com/bitcoinpolicy/status/2105286617967497425
The paper also examines Strategy’s internal accounting, noting the company reported $22.8 billion in bitcoin-related operating losses during the first half of 2026, against $195 million in other operating expenses. Brown argues that utilizing Strategy’s reported figures would prevent the triggering of one MSCI flag, suggesting that reaching MSCI’s simulated deletion requires an undisclosed analytical reclassification.
Broader Impact on Capital-Intensive Industries
MSCI’s simulated deletions extend beyond digital assets to include Yellow Cake, a firm holding physical uranium. The Bitcoin Policy Institute paper evaluates how the same methodology applies to other capital-intensive businesses. Under Brown’s interpretation, AST Spacemobile could trigger four of MSCI’s flags and face exclusion as a new index entrant.
Lithium Americas faces a similar scenario regarding its Thacker Pass lithium project in Nevada. The company reported $3.54 billion in assets in June, which included $2.09 billion in mineral properties, plant, and equipment. Brown’s analysis indicates that a restrictive reading of MSCI’s criteria could categorize a mine under construction as non-operating simply because it is capital-intensive, pre-revenue, and reliant on external financing.
MSCI expects to reach a decision on or before October 16, with any implemented changes scheduled for its November index review around December 1.
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