Strategy (MSTR) has written a formal letter in response to MSCI’s proposal to exclude companies whose holdings of digital assets represent 50% or more of total assets from the MSCI Global Investable Market Indexes.
Led by executive chairman Michael Saylor, Strategy argued that digital asset treasury companies (DATs), including Strategy itself, run businesses that use digital assets as productive capital, not passive vehicles to track price movements. Strategy builds bitcoin-backed credit instruments, manages an active corporate treasury program and maintains a global business analytics software business. Investors are buying the company’s strategy and management, not a static wrapper for bitcoin, the company said.
Already under severe pressure thanks to falling bitcoin prices and a narrowing of mNAV (the premium on bitcoin holdings at which investors value a company), Strategy shares tumbled further two weeks ago when the MSCI proposal emerged. MSTR stands to lose many billions in passive capital flows if it is removed from MSCI indices.
Returning to Strategy’s arguments, the company also listed five reasons why the company is not an investment fund:
1. Strategy is organized as a conventional operating company.
2. The company has no fund or ETP-like structure or obligations.
3. MSTR is not an investment company according to current legislation.
4. The company does not create any fund-like tax treatment for investors
5. It has a long history as an operations software company.
The proposed 50% threshold is described as arbitrary and unworkable, Strategy said. Many companies have concentrated reserves in oil, real estate, timber or utilities but remain eligible for MSCI indices. MSCI thus only selects companies that are backed by digital assets.
The strategy further argued that the proposal injects political views into the index construction at a time when federal policy has shifted toward supporting digital asset innovation. Excluding DATs could force large passive outflows, undermine US competitiveness and slow the expansion of new financial technologies.
If MSCI remains inclined to treat DATs differently, Strategy urged the company to extend the consultation and provide a more detailed basis for any proposed changes.
