Strategy (MSTR) has written an official letter in response to MSCI’s proposal to exclude companies whose digital asset holdings represent 50% or more of total assets from the MSCI Global Investable Market indices.
Led by Executive Chairman Michael Saylor, Strategy argued that digital asset treasury (DAT) companies, including Strategy itself, operate businesses that use digital assets as productive capital, not as passive vehicles for tracking price movements. Strategy builds bitcoin-backed credit instruments, operates an active corporate treasury program, and runs a global business analytics software business. Investors are buying into the company’s strategy and management, not a static wrapper for Bitcoin, the company said.
Already under severe pressure from falling bitcoin prices and shrinking mNAV (the premium to bitcoin holdings at which investors value a company), Strategy shares fell further two weeks ago when the MSCI proposal was revealed. MSTR stands to lose several billion dollars in passive capital flows if it is removed from MSCI indexes.
Returning to Strategy’s arguments, the company also listed five reasons why the company is not an investment fund:
1. Strategy is organized like a traditional operating company.
2. The company does not have a fund or ETP type structure or obligations.
3. MSTR is not an investment company within the meaning of applicable laws.
4. The company does not create any funds as a tax treatment for investors
5. It has a long history as an operating software company.
The proposed 50% threshold is described as arbitrary and unworkable, Strategy said. Many companies hold reserves concentrated in oil, real estate, lumber or utilities, but remain eligible for MSCI indexes. MSCI thus only distinguishes companies backed by digital assets.
Strategy further argued that the proposal injects political viewpoints into the construction of the index at a time when federal policy has shifted toward supporting digital asset innovation. Excluding DATs could lead to significant passive capital outflows, undermine U.S. competitiveness, and slow the expansion of new financial technologies.
If MSCI continues to want to treat DATs differently, Strategy urged the company to extend the consultation and provide a more detailed basis for any proposed changes.
