MSCI's Cautious Stance on Digital Asset Treasuries is Justified

The recent news that MSCI, a leading index provider, may exclude digital asset treasuries from its indexes has sparked controversy in the crypto community. However, MSCI's cautious approach may be warranted given the questionable nature of some digital asset treasuries. With over $18 trillion in ETFs and institutional assets following its benchmarks, MSCI has a responsibility to protect investors. The rise of digital asset treasuries, such as MicroStrategy, has been rapid, but many of these companies have taken on significant debt to buy crypto, making them vulnerable to market fluctuations. The recent crypto sell-off has hurt many digital asset treasuries, with some being forced to sell their crypto holdings at a loss. This has raised concerns about the systemic risk of digital asset treasuries and whether they are investable, well-governed, and transparent. While not all digital asset treasuries are created equal, MSCI's cautious approach is understandable, and excluding them from major investment indexes may be a necessary step to protect investors. As the crypto market becomes increasingly integrated with traditional finance, it will have to adhere to stricter standards, which may ultimately strengthen the case for legitimate digital asset treasuries.