Strategy Challenges MSCI’s Proposal to Exclude Bitcoin-Based Companies from Indices

TLDR

• Strategy Inc. criticizes MSCI’s proposal to exclude Bitcoin-based firms from indexes.
• MSCI’s new rule unfairly targets digital asset companies, says Strategy Inc.
• Strategy opposes MSCI’s Bitcoin exclusion, citing innovation concerns.
• Strategy warns MSCI’s digital asset rule could hurt the U.S. economy.
• Strategy calls for a more thoughtful review of digital asset treasury rules.

Strategy Inc., formerly MicroStrategy, has strongly opposed MSCI’s proposal to exclude companies whose digital asset holdings exceed 50% of their total assets from the Global Investable Market Indexes. The company argues that such a move unfairly targets digital asset companies and could disrupt the market. MSCI’s plan, aimed at standardizing eligibility criteria for its indexes, includes a provision to exclude Bitcoin-based companies, or Digital Asset Treasuries (DATs), like Strategy from its benchmarks.

Misunderstanding the Business Model of Digital Asset Treasuries

Strategy emphasizes that it is an operating business, not an investment fund. Unlike investment funds, which passively hold assets, Strategy uses Bitcoin to create returns through various innovative financial products. This distinction is crucial, as it underscores the active role these companies play in the economy, making them fundamentally different from passive asset holders.

The company stresses that the proposed 50% threshold is an arbitrary and discriminatory measure. Many industries, including oil and real estate, concentrate their assets in one area, yet they are not subjected to similar restrictions. Strategy argues that applying this rule to Bitcoin-focused companies creates an unfair bias against them without a logical basis, given that businesses in other sectors face similar asset concentration risks.

Implications for MSCI’s Neutrality and the Digital Asset Industry

Strategy also raised concerns that MSCI’s proposed policy would undermine the neutrality of its indexes. MSCI has long been viewed as a neutral body that provides indices reflecting market evolution without passing judgment on specific sectors or technologies. By introducing a digital asset-specific rule, MSCI risks transforming its role from neutral index provider to an arbiter of investment decisions.

Moreover, Strategy believes that the exclusion of Bitcoin-based companies could have broader negative consequences for the U.S. economy. The U.S. has emerged as a global leader in the digital asset space, and Strategy asserts that any policy that hampers the growth of this sector is counterproductive. The company warns that stifling innovation in the digital asset market goes against the pro-innovation policies advocated by the current U.S. administration.

Strategy Calls for a Deliberate Approach to Indexing Changes

Strategy urges MSCI to reconsider its proposal and adopt a more deliberative approach. It points to the careful, 19-year process MSCI used to restructure the “Communication Services” sector, suggesting a similar approach for the evolving digital asset industry. The company advocates for more time to observe the development of Digital Asset Treasuries before making drastic changes to their classification within global indices.

Strategy challenges MSCI’s plan to exclude Bitcoin-based companies from its indices, citing mischaracterization of business models, arbitrary asset thresholds, and potential harm to innovation.

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