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August 26th, 2025
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S&P Blocks Strategy’s Inclusion Sending Message to Boards
Crypto | Sep 16, 2025
Image: Freepik/drobotdean
S&P’s Rejection Shows Bitcoin Treasuries Face Barriers to Index Entry (and Automatic Passive Flows)
As reported by MarketWatch, the S&P Dow Jones Indices announced its quarterly rebalance and chose not to add Strategy Inc. (formerly, MicroStrategy) to the S&P 500.
Strategy Inc is the largest corporate holder of bitcoin with more than 630,000 BTC, equal to over 3% of the total supply, and met all the published criteria on market capitalization, liquidity, and profitability, but was essentially excluded by the powers of committee discretion. JPMorgan analysts said this exclusion is a warning shot to company boards that bitcoin heavy treasuries may face barriers to benchmark inclusion, limiting access to the large automatic flows of index tracking funds.
See: GameStop Joins Growing List of Bitcoin Treasury Holders
In response, Strategy’s executive chair Michael Saylor posted an image showing that its shares have outperformed the S&P 500 and Bitcoin with the caption “Thinking about the S&P right now ….” He also told Barron’s, “Every quarter, we make new believers. I think that will continue for the foreseeable future.”
Thinking about the S&P right now… pic.twitter.com/Y5nPc9XT4l
— Michael Saylor (@saylor) September 6, 2025
Exclusion from the S&P Raises the Cost of Capital
The S&P 500 is the most tracked equity index in the world. Entry usually lowers a company’s funding costs while expanding its investor base. Trillions of dollars are passively allocated to its members. While the methodology spells out eligibility rules, the committee reserves the right to apply judgment.
Inclusion in the S&P 500 forces trillions of dollars of index tracking funds to buy a company’s stock, creating large automatic inflows that lower funding costs and deepen liquidity. Exclusion means those compulsory passive flows never materialize.
See: Strategy Buys More BTC as Canadian Crypto ETFs Grow
Strategy built its bitcoin position through repeated equity offerings, which turned its stock into a leveraged proxy for bitcoin. That model is now constrained. At the same time, Nasdaq (where Strategy MSTR is currently listed) requires shareholder approval for certain crypto related financing steps, which increases governance complexity and slows decision making.
Together these barriers raise the cost and difficulty of growing corporate bitcoin reserves through treasury strategies. Boards now face a choice of maintaining a bitcoin identity with limited access to mainstream capital markets, or rebalance treasury policies to preserve index eligibility and liquidity.
Some Companies May Prefer Bitcoin ETF Exposure
Some investors may prefer exposure through ETFs rather than dealing with dilution or volatility inside an operating company. Equity research coverage and institutional ownership might reduce if analysts see a company as primarily a bitcoin vehicle rather than an operating business.
Exchange traded funds present a clear alternative. Canada approved spot bitcoin ETFs in 2021 and the United States followed in 2024. ETFs hold bitcoin directly in custody and issue units that trade on exchanges, offering regulated and liquid exposure. ETF fees are typically between 0.2% and 1.0%, relatively modest compared to the governance and financing costs of treasury strategies.
See: Trump Media and Crypto.com Launch Cronos Treasury Firm
However, corporate treasuries allow boards to control timing and scale, use equity issuance to accelerate exposure, and attract investors who prefer equity proxies for bitcoin. Yet these benefits are balanced by costs that now include index exclusion, shareholder approval requirements, and stock valuations that swing with bitcoin more than business fundamentals.
The early regulatory approval of spot bitcoin ETFs in Canada gave investors a first mover's advantage, and a clear and credible option for digital asset exposure at a time when corporate treasuries were still the main vehicle in other markets.
Since then, Canadian companies including miners and digital asset firms such as Hut 8 and BIGG Digital Assets have also pursued bitcoin treasury strategies. This means Canada now has both treasuries and ETFs operating side by side, and it is expected that additional pathways to digital asset investments will emerge over time as regulations evolve.
Outlook
The S&P committee will meet again this December to review index composition. That update could determine whether Strategy’s exclusion is temporary or a longer standing policy. Regardless of the outcome, the September rejection may already be impacting board room decisions affecting the balance between treasury exposure versus ETFs. ETFs offer a regulator approved and stable pathway for investor demand, while treasuries provide control and branding but now carry higher financing and governance costs.
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