TLDR
- Strategy asked MSCI to withdraw its proposal to exclude digital asset treasury firms from major indices.
- The company argues the plan repeats a 2025 proposal that MSCI had already dropped.
- Strategy says Bitcoin is reported as an operating segment under U.S. accounting rules, not a passive holding.
- JPMorgan analysts previously said the exclusion could trigger billions in fund outflows.
- Feedback on the proposal runs until the end of September, with a possible effective date of December 1.
Strategy is the largest Bitcoin treasury company in the world. This week, the firm asked MSCI to withdraw its newest proposal that could remove Strategy and other digital asset treasury firms from major stock indices.
MSCI is a global index provider. Many investment funds track its indices, so being removed can affect how much money flows into a stock.
Strategy called the plan misguided. The company laid out four reasons for its opposition.
The first reason is that the proposal targets digital asset treasury firms specifically. Strategy says this repeats a 2025 proposal that MSCI already withdrew, just with different wording.
MSCI wants to exclude companies it labels as non-operating. These are firms that mainly buy and hold assets rather than run active businesses.
Under MSCI’s plan, this would affect Strategy, Metaplanet, and a company that holds uranium. The goal is to keep MSCI’s Global Investable Markets Indexes focused on companies with real operating activity.
How Strategy Defends Its Bitcoin Holdings
Strategy argues the proposal breaks from U.S. accounting standards and securities law. The company also says it goes against MSCI’s own promise of staying neutral to the market.
Strategy points to U.S. GAAP and SEC guidance. Under these rules, the company reports its Bitcoin holdings as an operating segment.
Michael Saylor, the founder of Strategy, asked MSCI to act as a mirror of the market rather than a judge of it.
Phong Le, the CEO of Strategy, said other index providers like S&P, FTSE, Bloomberg, Nasdaq, and ICE reflect the market as it stands. He said MSCI appears to be taking a different path.
What Happens If MSCI Moves Forward
Last year, JPMorgan analysts warned that an MSCI exclusion could lead to billions of dollars in fund liquidations tied to Strategy’s stock.
The analysts also said other indices, including LSEG’s Russell index and Nasdaq, could follow MSCI’s lead. Combined outflows across all indices could reach close to nine billion dollars.
Strategy has downplayed this risk. The company says funds tracking MSCI indices hold about 3% of its shares outstanding, equal to roughly 60% of a single day’s trading volume.
Digital asset treasury firms as a group now hold about three billion dollars in crypto assets. That is down from more than eight billion dollars at the peak of the last bull market.
JPMorgan analysts said removing these firms from major indices could reduce trading liquidity. This could make the stocks less attractive to other investors over time.
The public feedback period on MSCI’s proposal runs until the end of September. If adopted, the change would take effect on December 1.
It is not yet clear how digital asset treasury firms will respond if the proposal moves forward as written.
