Strategy (MSTR) has formally written in response to MSCI’s proposal to exclude companies that hold digital assets accounting for 50% or more of the MSCI Global Investable Market Index.
Led by executive chairman Michael Saylor, Strategy believes that digital asset finance companies (DATs), including Strategy itself, are in the business of using digital assets as productive capital rather than passive tools that track price movements. Strategy builds Bitcoin-backed credit tools, manages active corporate financial plans and maintains global enterprise analytics software businesses. The company said investors are buying into the company’s strategy and management, not the static packaging of Bitcoin.
Strategy’s share price, which was already under intense pressure as Bitcoin prices fell and mNAV (the premium investors hold in Bitcoin for a company’s valuation) narrowed, fell further two weeks ago when the MSCI proposal came to light. If MSTR were removed from the MSCI index, it would lose billions of dollars in passive capital flows.
Returning to Strategy’s argument, the company also listed five reasons why the company is not an investment fund:
1. The strategic organization is a traditional operating company.
2. The company has no structure or obligations similar to a fund or ETP.
3. MSTR is not an investment company under applicable law.
4. The company does not create fund-like tax treatment for investors
5. It has a long history as an operational software company.
Strategy said the proposed 50% threshold was considered arbitrary and unworkable. Many companies hold concentrated reserves in oil, real estate, timber or utilities and still qualify for MSCI indexes. Therefore, MSCI only singles out companies backed by digital assets.
Strategy further believes that the proposal injects policy perspectives into index construction at a time when federal policy is shifting to support digital asset innovation. Excluding DATs could force massive outflows of passive capital, undermine U.S. competitiveness and slow the expansion of new financial technologies.
If MSCI continues to prefer treating DAT differently, Strategy urges the firm to expand the scope of the consultation and provide a more detailed basis for any proposed changes.