Strive, a Nasdaq-listed structured-finance firm and major Bitcoin holder, opposes MSCI’s plan to exclude companies with over 50% digital assets from global equity indexes, arguing it violates index neutrality and could distort markets for Bitcoin treasury strategies.
-
Strive holds over 7,500 BTC, positioning it as one of the largest public corporate Bitcoin holders worldwide.
-
MSCI’s proposed 50% threshold is criticized as overbroad, ignoring the diverse operations of Bitcoin-related firms beyond mere asset holding.
-
Implementation could trigger up to $9 billion in market outflows if other index providers follow suit, per analyst estimates.
Strive challenges MSCI’s Bitcoin exclusion rule: Discover why this Nasdaq firm fights for index inclusion and its impact on crypto markets. Stay informed on Bitcoin treasury strategies today.
What is Strive’s Position on MSCI’s Bitcoin Exclusion Proposal?
Strive’s position on MSCI’s Bitcoin exclusion proposal centers on preserving the neutrality of global equity benchmarks. In a letter to MSCI CEO Henry Fernandez, the Nasdaq-listed structured-finance company argues that excluding firms with significant digital asset holdings, such as Bitcoin, undermines long-established principles of fair indexing. Strive, which manages over 7,500 BTC on its balance sheet, emphasizes that indexes should reflect market realities without imposing special rules on digital currencies. This stance highlights the growing integration of Bitcoin treasuries in corporate finance, urging MSCI to avoid distortions that could harm investor access to these assets.
Strive’s heritage in structured finance gives it a deep perspective on how Bitcoin-holding companies function within broader economic contexts. The firm warns that blanket exclusions would not only penalize innovative businesses but also limit the representation of real economic value in major benchmarks. By advocating for methodology based on digital currency markets, Strive aims to ensure equitable treatment for all sectors, including those leveraging cryptocurrency as a strategic reserve asset.
Why Does Strive Argue the 50% Digital Asset Threshold is Flawed?
Strive contends that MSCI’s proposed 50% digital asset threshold for exclusion from indexes is fundamentally flawed due to its lack of nuance and practicality. This rule fails to recognize the multifaceted nature of companies involved in Bitcoin, many of which operate robust businesses in areas like AI-driven data centers, structured finance, and digital asset services. For instance, prominent Bitcoin miners such as Marathon Digital, Riot Platforms, Hut 8, and CleanSpark have evolved beyond mining to lease surplus power, computing resources, and data-center facilities to cloud and hyperscale clients, generating substantial revenue from these diversified activities.
According to Strive’s analysis, enforcing such a threshold overlooks these operational diversifications, potentially eliminating significant economic contributions from global benchmarks. Moreover, accounting discrepancies exacerbate the issue: Under U.S. GAAP, digital assets like Bitcoin are marked to fair market value quarterly, which can inflate apparent concentrations, while IFRS allows cost-basis carrying in many regions. This variance could lead to inconsistent treatment of similar companies based solely on reporting jurisdiction, as noted in Strive’s letter. Expert opinions from financial analysts, including those cited in recent Bloomberg reports, echo these concerns, highlighting how such rules could inadvertently favor certain accounting regimes over others.
To address these shortcomings, Strive proposes a more balanced alternative: MSCI should develop optional index variants, such as “ex-digital-asset-treasury” versions, similar to existing “ex-energy” or “ex-tobacco” screens. This approach would allow risk-averse investors to self-select exclusions without imposing them universally, maintaining overall index integrity. Data from index provider studies shows that screened variants already account for targeted preferences without disrupting core benchmarks, supporting Strive’s call for flexibility. By prioritizing fairness and market reflection, this solution could prevent unintended market distortions while accommodating diverse investor needs.
Frequently Asked Questions
Will Strive Be Excluded from MSCI Indexes Due to Its Bitcoin Holdings?
Strive’s substantial Bitcoin holdings, exceeding 7,500 BTC or over 50% of its assets, place it at risk of exclusion under MSCI’s proposed rule. The firm argues this would contradict index neutrality principles, potentially leading to billions in passive fund outflows. MSCI’s final decision, expected in early 2025, will determine if such companies remain eligible for global equity benchmarks.
What Are the Market Implications of MSCI Excluding Bitcoin-Heavy Companies?
If MSCI implements the exclusion, it could redirect up to $2.8 billion from tracked funds for firms like Strive alone, with total impacts nearing $9 billion if competitors mimic the policy. This shift might reduce institutional demand for Bitcoin treasuries, affecting share prices and crypto market liquidity. Investors should monitor how this influences broader adoption of digital assets in corporate strategies.
Key Takeaways
- Index Neutrality at Stake: Strive’s opposition underscores the need for benchmarks to treat digital assets like traditional holdings, avoiding special exclusions that could bias markets.
- Diversification Overlooked: Many Bitcoin firms, including miners, have expanded into AI infrastructure and energy leasing, making a strict 50% threshold overly punitive and unrepresentative of their full operations.
- Investor Choice Essential: Optional screened indexes provide a fairer path, empowering users to avoid Bitcoin exposure without penalizing the wider market or innovative corporate treasuries.
Conclusion
In summary, Strive’s position on MSCI’s Bitcoin exclusion proposal highlights critical tensions in integrating digital assets into traditional finance, where the flawed 50% threshold risks unfair treatment and market disruptions for Bitcoin-heavy companies. By drawing on its expertise as a major BTC holder, Strive advocates for neutral, adaptable indexing that reflects evolving corporate strategies. As the cryptocurrency sector matures, decisions like MSCI’s will shape institutional investment flows—investors are encouraged to follow developments closely and consider diversified portfolios that balance innovation with risk management in the years ahead.
Source: https://en.coinotag.com/strive-opposes-msci-proposal-to-exclude-bitcoin-heavy-firms-from-global-indexes
