Key Points
- BFC wants JPX to withdraw the proposed exclusion of crypto-heavy companies from TOPIX, calling it a policy judgment not an investability rule.
- The proposal lacks a clear definition of “principal asset” and a sunset provision, making it too vague to administer consistently.
- While MSCI weighed and shelved a digital-asset exclusion, JPX’s proposal goes further without a sunset mechanism, BFC noted.
Bitcoin For Corporations (BFC) on Monday asked JPX Market Innovation & Research to withdraw a proposal that would bar companies whose principal asset is crypto-assets from entering the TOPIX benchmark.
The proposal matters for investors because several mutual funds and exchange-traded funds track the TOPIX through feeder or fund-of-fund structures. Any change in the index’s composition would alter the basket that passive funds must replicate. In a statement issued, BFC listed four specific objections that go to the integrity of a flagship benchmark followed worldwide.
JPX Market Innovation & Research, the index arm of Japan Exchange Group, published the consultation on 3 April 2026. It does not propose a numerical threshold. The draft says only that “for the time being” companies whose principal asset is crypto-assets would be deferred from new inclusion in TOPIX and other periodically reviewed indices.
Existing constituents would remain. October 2026 marks the first periodic review under the next-generation TOPIX framework where Standard and Growth market companies can gain eligibility through the new process.
BFC argued that the proposal is not a genuine investability rule. TOPIX already uses objective criteria including liquidity screens, free-float-adjusted market capitalisation, continuation buffers and listing-quality reviews. The suggested crypto-asset screen does not measure any of these. It excludes companies solely because of what sits on their balance sheet.
Four concerns with the exclusion
The coalition laid out four concerns in its response.
First, the proposal introduces an asset-specific filter into a benchmark built on transparent eligibility rules. It is framed in the language of investability and stability but ignores the ordinary indicators such as free float, trading volume and listing quality.
Second, the consultation is too vague to administer. It does not clarify whether the test for “principal asset” applies at the parent level or on a consolidated basis, whether it looks through subsidiaries, or whether indirect exposure through securities would be captured. A rule that cannot be applied consistently should not appear in a flagship benchmark.
Third, a rule that penalises direct holding while ignoring exposure held through a wholly owned subsidiary or a strategic equity position targets legal form rather than economic substance. That would encourage balance-sheet engineering instead of improving index quality.
Fourth, the exclusion is both pre-emptive and open-ended. October 2026 is the first review under the new framework, yet JPX wants to block a category of companies before they have been assessed under ordinary criteria. The consultation says the exclusion would apply “for the time being” without setting a review period, an exit standard or a sunset mechanism. BFC called this an indefinite deferral with uncertain boundaries.
“TOPIX is meant to be a broad, neutral, investable benchmark of the Japanese equity market,” said George Mekhail, managing director, Bitcoin For Corporations. “If a company satisfies the ordinary market-based eligibility standards, excluding it because of one asset category is not a normal investability screen. It is a policy judgement about one asset class, and it does not belong in the methodology of a flagship market benchmark.”
BFC also noted that major global index providers have treated the issue with greater restraint. MSCI considered a threshold-based exclusion for digital-asset treasury companies but did not adopt a blanket exclusion, acknowledging that further work was needed to separate operating companies from non-operating or investment-like entities. FTSE Russell has not announced a comparable blanket exclusion.
“If JPX believes there is a broader question about highly concentrated or investment-like companies, then an asset-neutral framework, applied consistently, would be more appropriate,” Mekhail said. “Singling out one asset class by introducing a vague rule that is easy to evade and difficult to administer would be unprecedented and untethered from TOPIX’s actual investability criteria.”
BFC urged JPX to withdraw the proposed exclusion, preserve TOPIX as a neutral and rules-based benchmark, refrain from adopting an open-ended deferral without a clear review process and engage with issuers before changing TOPIX methodology.
