Strategy and other crypto treasury firms were just spared a big blow — for now

• MSCI said it wouldn't boot crypto treasury firms from its indexes.
• The threat of being excluded from benchmarks has weighed on Strategy stock.
• However, MSCI said a wider review of "non-operating companies" is coming.

The crypto market was spared a blow this week after indexing giant MSCI opted not to delist crypto holding companies from its indexes.

MSCI decided not to proceed with a proposal to exclude digital asset treasuries from its indexes, though it said it would conduct a wider review of how some companies are treated.

The move spares companies like Strategy and other firms whose main business is buying and holding crypto from a potentially devastating blow. If MSCI dumped those stocks, many investors who track its indexes would have likely followed suit. However, it leaves the door open to a crackdown in the future.

Strategy stock spiked as much as 5% on the news.

When the MSCI first said it was considering excluding firms with 50% or more assets in crypto, the idea sparked strong backlash from the industry. MSCI's argument was that crypto treasuries are more like investment funds than operating companies, and should be treated differently for the purposes of inclusion in some of its world indexes.

Frank Chapparo, head of content at crypto market maker GSR, said that the upates is a subtle but important developement for the crypto market, which is still fragile following the market meltdown sent prices plummeting in the fourth quarter.

"As leverage unwound and sentiment around these structures deteriorated, weakness in DAT equities spilled over into broader crypto risk appetite," he told Business Insider. "Against that backdrop, any credible bullish catalyst for the space, particularly one tied to index inclusion and institutional access, carries outsized signaling value right now."

Chapparo added that while many exchange platforms offer investors the opportunity to purchase crypto, the majority of traders still opt to gain exposure through funds and other index-linked products.

That said, MSCI signaled that it plans to embark on a broader consultation over how "non-operating companies" should be treated. Another bout of uncertainty related to indexing could create fresh headwinds for Strategy and other companies that hoard crypto on their balance sheets.

Chapparo said that he thinks this strong scrutiny on the part of the index is justified, highlighting the importance of holding DATs to high standards

"Companies that function more like investment funds than operating businesses with bitcoin as a core treasury asset should be evaluated differently and potentially excluded," he said. "Clear and consistent criteria will be essential to preserve index integrity as these structures proliferate."