Strategy (MSTR) has issued a formal letter regarding MSCI’s plan to exclude companies whose digital asset holdings constitute 50% or more of their total assets from the MSCI Global Investable Market Indexes.
Led by Executive Chairman Michael Saylor, Strategy contends that digital asset treasury companies (DATs), including Strategy itself, operate as businesses that utilize digital assets as productive capital rather than passive instruments for price tracking. Strategy develops bitcoin-backed credit products, oversees an active corporate treasury initiative, and maintains a global enterprise analytics software firm. Investors are purchasing the company’s strategies and management rather than merely a stagnant vehicle for bitcoin, according to the firm.
Amid substantial pressure from declining bitcoin values and a reduced mNAV (the premium investors assign to bitcoin holdings), Strategy’s shares fell even further two weeks ago following news of the MSCI proposal. If removed from MSCI indexes, MSTR could face losses in the billions from passive capital outflows.
Revisiting Strategy’s arguments, the company articulated five reasons it does not qualify as an investment fund:
1. Strategy is structured as a traditional operating company.
2. The company lacks a fund or ETP-like structure or obligations.
3. MSTR does not meet the definition of an investment company under relevant laws.
4. The company does not provide fund-like tax treatment for investors.
5. Strategy has a long-standing history as an operating software business.
The proposed 50% threshold was deemed arbitrary and unfeasible, according to Strategy. Many firms possess concentrated reserves in sectors like oil, real estate, timber, or utilities and remain eligible for MSCI indices, indicating that MSCI is singling out only digital asset-backed companies.
Furthermore, Strategy posited that the proposal infuses policy perspectives into index formation at a time when federal policy is leaning towards supporting digital asset innovation. Exclusion of DATs could result in significant passive outflows, jeopardize American competitiveness, and hinder the development of new financial technologies.
If MSCI intends to continue treating DATs differently, Strategy urged the organization to extend the consultation period and provide a more comprehensive justification for any proposed alterations.
