The news that MSCI, one of the world’s “big three” index providers, is considering the possibility of removing Digital Asset Treasury (DAT) from its indexes has shocked the crypto community. JP Morgan’s mention of this in its strategic research note only adds fuel to the fire, and the term “Operation Chokepoint” is back in the crypto Twitter lexicon. However, MSCI may be right about DAT.
MSCI is one of the world’s largest index providers, managing more than $18 trillion in ETF and institutional assets according to its benchmarks. Investor protection is therefore an important part of their role, and in fact they clearly and repeatedly state this in their index methodology documentation. Approving an asset for inclusion in one of the indexes gives it significant leverage. And, unfortunately, it’s questionable whether DAT really meets these benchmarks.
The rise and fall of DAT
Until recently, Strategy (formerly MicroStrategy) was the only Bitcoin treasury game in town. Originally a software business, Strategy (ticker MSTR), under the leadership of Michael Saylor, gradually moved away from its core business and became essentially a leveraged BTC play listed on a traditional stock market.
And it turned out to be really successful. From its first Bitcoin purchase in August 2020 to its peak in June 2025, MSTR stock soared more than 3,000%. In fact, it was so successful that many other companies decided they wanted a piece of the pie. And this year, the DAT trend has exploded. That number grew from just four in 2020 to 142 by October 2025, with more than half of them born this year alone. Some corporations are now investing in tokens such as DOGE, ZEC, and WLFI, which have much higher volatility than BTC.
But that’s not the only problem. Many of these new entities raised funds to purchase cryptocurrencies on much less favorable terms than Strategies. Strategy’s unsecured convertible notes offer significant repayment flexibility. Meanwhile, other companies have issued collateralized bonds, meaning they face stricter collateral requirements and have far less freedom, and then buy cryptocurrencies at much higher average prices.
biggest pain
As a result, DAT is currently suffering from the severe cryptocurrency decline over recent weeks. The crash has nearly halved DAT’s market capitalization from a peak of $176 billion in July to about $99 billion in mid-November, with many DATs now trading below their net asset values (NAVs). For investors looking to buy these stocks at this point in the market, this could potentially mean a discount. This is a big “if” if there is a potential future value. Meanwhile, early investors are feeling the pain as crypto government bond stock prices fall.
Even Strategy’s stock is down 40% since the beginning of the year, and Tom Lee’s Bitmine is down nearly 80% from its all-time high (though its stock is up nearly 300% since the beginning of the year). However, Saylor and Lee have enough vehicle structure to afford to buy into lower stock prices, and both have done so. Some people aren’t doing so well.
Already, some DATs have been forced to sell their crypto holdings to fund share buybacks after their stocks suffered brutal sell-offs, almost certainly at a loss. A few weeks ago, ETH treasury company ETHZilla sold $40 million worth of tokens, while FG Nexus was forced to sell over 10,922 ETH in order to buy back around 8% of its publicly tradable shares. Similarly, in early November, BTC Treasury Seconds sold 970 Bitcoins to redeem half of its convertible debt. This type of forced liquidation is highly unusual for a listed company, especially so soon after its formation, and clearly indicates a structural problem.
It really feels like we are watching the dominoes start to fall, but we are not even close to crypto winter yet. For now, this is just a relatively standard bull market correction. So it’s particularly worrying that these companies are currently being hit so hard. What if something similar to the 2022 recession occurs?
As someone who closely monitors the cryptocurrency market on a daily basis, I have been concerned about the systemic risk of DAT for some time. So why should MSCI not be concerned about including these assets in its index? Their approval would demonstrate that DAT is investable, well managed, and fully transparent. Conversely, excluding them suggests unacceptable levels of risk, structural issues, or liquidity or governance concerns. It’s easy to see how many DATs fall into the latter category.
TradFi Games
Of course, not all DATs are created equal. While the majority of crypto companies currently on the market likely won’t survive a full-blown recession, companies like BitMine and Strategy will almost certainly be fine. So there’s an argument that MSCI is throwing out the baby with the bath water when it comes to these companies.
But overall, MSCI is right to be cautious about DAT. Many are risky vehicles that jump on the hype in search of a quick profit. Removing them from major investment indexes is not a sign of some kind of coordinated attack on cryptocurrencies as a whole, but simply an attempt by TradFi to be cautious and protect investors.
And as cryptocurrencies become increasingly integrated with the traditional financial ecosystem, this is a part we all have to accept. These are the growing pains that come with big changes. But in the end, these strict standards can be a blessing in disguise. Over time, they may strengthen the Treasury’s case for legitimate digital assets while weeding out risky and poorly structured companies before they become systemic risks.
