Strategy (MSTR) has written a formal letter in response to MSCI’s proposal to exclude from the MSCI Global Investable Market indices companies whose digital asset holdings represent 50% or more of total assets.
Led by CEO Michael Saylor, Strategy argued that digital asset treasury (DAT) companies, including Strategy itself, are operating businesses that use digital assets as productive capital, not passive vehicles for tracking price movements. Strategy creates bitcoin-backed credit instruments, manages an active corporate treasury program, and maintains a global business analytics software business. Investors buy into the company’s strategy and management, not a static wrapper for bitcoin, the company said.
Already under huge pressure thanks to falling bitcoin prices and a tightening mNAV (the premium on bitcoin holdings at which investors value a company), Strategy shares fell further two weeks ago when MSCI’s proposal came to light. MSTR could lose many billions in passive capital flows if it were removed from the MSCI indices.
Returning to Strategy’s arguments, the company also listed five reasons why the company is not an investment fund:
1. The strategy is organized like a conventional operating company.
2. The company does not have funds or structure or obligations similar to those of an ETP.
3. MSTR is not an investment company under applicable laws.
4. The company does not create any fund as 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 have reserves concentrated in oil, real estate, timber or utilities, but remain eligible for MSCI indices. Therefore, MSCI highlights only companies backed by digital assets.
Strategy further argued that the proposal injects political opinions into the construction of the index at a time when federal policy has shifted toward supporting digital asset innovation. Excluding DATs could force large passive outflows, undermine American competitiveness, and slow the expansion of new financial technologies.
If MSCI remains inclined to treat DATs differently, Strategy urged the company to broaden the consultation and provide a more detailed basis for any proposed changes.
