Crypto professionals are opposed to a possible move to exclude Bitcoin treasuries from MSCI indexes, arguing that such a move could cut investors off from a lucrative market niche.
The MSCI is mulling excluding DATs that have invested over 50% of their assets in Bitcoin or other crypto, claiming they are more investment funds than operating firms.
However, the idea has not only drawn fierce backlash from the industry but also from industry leaders such as Michael Saylor of Strategy and Viek Ramaswamy of Strive Asset Management. The MSCI announced its possible exclusion plans in October, with a final decision expected to be reached at the beginning of next year.
Meanwhile, players in the crypto market emphasize that the MSCI’s exclusion of DATs from its indexes is a mistake. Adam Levine, Fireblocks’ CEO, said the MSCI plan might backfire and will likely not play well with institutional investors. He noted that these institutional investors have already warmed up to crypto in recent years and may be forced to rebalance their holdings to track the index.
Levine claims businesses could miss out on tokenized equity
The Fireblocks CEO pointed out that the MSCI is introducing the risk of missing key market players if it leaves out companies that have a meaningful presence in the crypto space. He further compared it to the equivalence of intentionally ignoring early internet companies 30 years ago, especially now that businesses are innovating with tokenized equity and stablecoins.
Meanwhile, Spencer Hallarn, the head of OTC trading at GSR, said the decisions by the MSCI and other index providers to exclude DATs have real implications on the broader industry, and by extension, the crypto they hold. He, however, believes that the rumored exclusion has been well planned for, so it would be reasonable to assume that the market has already priced it in. It is unlikely to come as a surprise, he added.
The Business Insider also predicts that the MSCI’s potential exclusion of DATs has already been factored into the market’s outlook despite the likely adverse implications for DATs. Meanwhile, Wojciech Kaszycki, BTCS S.A.’s chief strategy officer, predicts that Bitcoin can still recover from the bear market and the rebound is definitely coming.
Strive urges MSCI to scrap exclusion plans
Nasdaq-listed Strive Asset Management is among the many crypto-related firms urging the MSCI to scrap its potential exclusion plans. The company emphasizes that cutting off BTC-focused DATs is unfair because they are crucial to structured finance and AI infrastructure. The MSCI’s chairman and CEO, Henry Fernandez, believes that the exclusion risks shutting down passive investors from a fast-growing market.
Meanwhile, JPMorgan cautions that Strategy stands to lose nearly $2.8 billion if the MSCI index decides to exclude such Bitcoin treasuries. Strategy’s Saylor has confirmed that talks with MSCI are ongoing, as the company remains opposed to the move.
Strive’s CEO, Matt Cole, also argues that the proposed exclusion misunderstands the role played by large Bitcoin firms in emerging industries, particularly in the field of AI. However, he notes that potential exclusion targets, such as MARA, Riot Platforms, and Hut 8, are expanding into AI by repurposing data centers for high-intensity compute workloads.
On the other hand, Cole further noted that these companies will continue holding substantial Bitcoin reserves amid increasing AI revenue. He points out that the MSCI’s exclusion would permanently isolate a sector of the crypto industry that sits at the intersection of the next generation of computing and crypto.
Strive further challenged the practicality of the MSCI’s exclusion threshold of 50% or more, highlighting the Trump Media & Technology Group as an example. The Trump-backed company narrowly avoided the initial MSCI exclusion because its BTC exposure is currently below the cutoff.
Meanwhile, Strive suggests a parallel version of MSCI’s index for ex-DATs, rather than a blanket rule. The company says this will allow asset managers to avoid crypto-heavy firms as they await the MSCI’s final decision.
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Source: https://www.cryptopolitan.com/crypto-against-msci-indexes-exclusion/
