The news that MSCI – one of the “big three” global index providers – is seeking to potentially exclude digital asset treasuries (DATs) from its indices has absolutely outraged the crypto community. JP Morgan mentioning this in its research note on the strategy only added fuel to the fire, with the term “Operation Chokepoint” returning to the Crypto Twitter lexicon. However, MSCI may have a valid argument when it comes to DATs.
MSCI is one of the world’s largest index providers, with more than $18 trillion in ETFs and institutional assets tracking its benchmarks. As such, investor protection is a key part of their role – and, indeed, they make this clear and repeatedly in their index methodology documents. If they approve an asset for inclusion in one of their indexes, that carries real weight. And, unfortunately, it is questionable whether DATs actually meet these criteria.
The Rise and Fall of DATs
Until recently, Strategy (formerly MicroStrategy) was the only Bitcoin cash game in town. Originally a software company, Strategy (under the ticker MSTR) gradually moved away from its core business under the leadership of Michael Saylor to become, essentially, a leveraged BTC play listed on the traditional stock market.
And it turned out very well as a result. From his first purchase of Bitcoin in August 2020 to the June 2025 peak, MSTR’s stock price soared more than 3,000%. In fact, it was so successful that many other companies decided they wanted a piece of the pie. So, this year, the trend for DATs has exploded: their number has increased from just 4 in 2020 to 142 in October 2025, more than half of which saw the light of day this year alone. We now even have companies investing in tokens like DOGE, ZEC or WLFI, whose volatility is much higher than that of BTC.
But that’s not the only problem. Many of these new companies have raised funds to buy cryptocurrencies on much more unfavorable terms than Strategy, whose unsecured convertible debt gives it great repayment flexibility. Others, meanwhile, have issued collateralized debt – meaning they face stricter collateral requirements and have much less room to maneuver – and, on top of that, have purchased cryptocurrencies at much higher average prices.
Maximum pain
As a result, DATs are now suffering from the brutal sell-off of cryptocurrencies in recent weeks. The crash cut the combined market capitalization of DATs by almost half, from July’s peak of $176 billion to around $99 billion in mid-November, with many now trading below their net asset value (NAV). For investors looking to buy these stocks at this point in the market, this could potentially represent a discount – if they see any future value, which is a big if. In the meantime, early investors are feeling the pain, as crypto Treasury stock prices plummet.
Even Strategy’s stock is down 40% year-to-date, and Tom Lee’s BitMine is trading down nearly 80% from its all-time high (although shares are up almost 300% year-to-date). Saylor and Lee, however, structured their vehicles well enough to have the luxury of buying the dip – which they both did. Others don’t fare as well.
After their shares suffered sharp 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 company ETHZilla sold $40 million worth of tokens, while FG Nexus was forced to sell more than 10,922 ETH to repurchase around 8% of its publicly traded shares. Similarly, in early November, BTC Sequans treasury sold 970 Bitcoins to pay off half of its convertible debt. These types of forced liquidations are very unusual for publicly traded companies, especially soon after launch, and clearly highlight 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 just a relatively classic upward correction. It is therefore particularly worrying to see that these companies are suffering so much today: what will happen if we see a phenomenon closer to the slowdown of 2022?
As someone who closely monitors the crypto market on a daily basis, I have been concerned about the systemic risk of DATs for some time. So why shouldn’t MSCI bother including these assets in its indices? Its approval would indicate 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 DAT files fall into the latter category.
The TradFi game
Of course, not all DAT files are equal. While a large portion of the crypto companies in the market today likely won’t survive a real downturn, companies like BitMine and Strategy will almost certainly do. So some argue that MSCI is throwing the baby out with the bathwater when it comes to these companies.
But overall, MSCI is not wrong to be cautious with DATs. Many of them are risky vehicles that have jumped on the hype bandwagon in hopes of quick gains. Excluding them from major investment indices is not a sign of some kind of coordinated attack on crypto as a whole – it’s simply TradFi being cautious and seeking to protect investors.
And as crypto becomes more and more integrated into the traditional financial ecosystem, this is part of what we will all just have to accept. These are the growing pains that come with major change. But ultimately, these strict standards could be a blessing in disguise. Over time, they could strengthen the case for legitimate digital asset treasuries – while weeding out risky, poorly structured businesses, before they become a systemic risk.
