Strategy, a pioneering Bitcoin treasury company, has submitted a formal response to MSCI’s consultation on digital asset treasury companies (DATs), urging the index provider to reconsider its proposal to exclude companies with digital asset holdings exceeding 50% of total assets, citing the potential for “profoundly harmful consequences” on investors and the broader digital asset industry, including the emerging Bitcoin investment sector.
In its detailed letter to the MSCI Equity Index Committee, Strategy argued that the proposed threshold is “misguided” and would unfairly penalize companies like itself that have made significant investments in digital assets, including Bitcoin, as part of their treasury management and capital markets strategies.
As a corporate treasury and capital markets business with a long history dating back to 1989, Strategy has established itself as a leader in the digital asset space, offering investors a range of equity and fixed-income securities backed by its digital assets, including Bitcoin investment products. The company’s innovative approach to treasury management has enabled it to generate returns for shareholders while providing novel financial instruments akin to traditional bank and insurance products, making it an attractive option for investors looking to diversify their portfolios with digital asset investment opportunities.
The company emphasized that “DATs are operating companies, not investment funds,” highlighting its operational flexibility and ability to adapt its business model as the technology evolves, allowing it to stay ahead of the curve in the rapidly evolving digital asset market.
Strategy Criticizes MSCI’s Proposal as “Arbitrary, and Unworkable”
Strategy criticized MSCI’s proposal for introducing a digital-asset-specific 50% threshold, calling it “discriminatory, arbitrary, and unworkable,” and warning that it would create index instability and cause DATs to whipsaw in and out of MSCI’s indices, potentially leading to significant outflows and undermining the integrity of the indices, including those focused on Bitcoin investment.
The company highlighted that many traditional businesses, including oil companies, timber operators, REITs, and media firms, also maintain concentrated holdings in single asset types but are not treated as investment funds, demonstrating that the proposed threshold is not only arbitrary but also unfair to DATs, which are driving innovation in the digital asset economy.
The letter further argued that the proposal would inappropriately inject policy considerations into index construction, compromising MSCI’s neutrality and potentially misleading investors about the nature of DATs, which are operating companies that happen to hold digital assets, including Bitcoin, as part of their treasury management strategies.
Excluding DATs based on the type of assets they hold, rather than their underlying business model, could damage MSCI’s reputation for providing objective and accurate market indices, including those related to digital asset investment. Strategy noted that its investors buy exposure to the company’s management and innovation capabilities, not merely to Bitcoin itself, citing historical trading patterns in which the company’s stock often outperformed the underlying value of its digital holdings.
Digital Assets and U.S. Economic Policy
The company also framed the debate in the context of U.S. economic policy, noting that the federal government has made digital assets central to national economic endeavors, including the establishment of a Strategic Bitcoin Reserve and promoting access to digital assets in retirement accounts, demonstrating the growing importance of digital asset investment in the US economy.
Excluding DATs from MSCI indices would conflict with these policies and chill innovation in the nascent digital asset sector, potentially undermining the growth of the digital asset economy and limiting access to digital asset investment opportunities for investors.
Analysts cited in the letter estimate that Strategy alone could face up to $2.8 billion in stock outflows if MSCI implements the exclusion, with broader implications for the emerging digital asset economy and the Bitcoin investment sector.
Strategy positioned itself within a historical context, comparing the rise of digital asset treasuries to earlier industrial leaders, such as Standard Oil, AT&T, Intel, and NVIDIA, which made concentrated investments in emerging technologies that were initially viewed as risky but ultimately became foundational to economic growth, demonstrating the potential for digital asset investment to drive innovation and growth in the economy.
The letter highlighted examples of companies that have successfully invested in emerging technologies, including Bitcoin, and argued that digital asset treasuries are building critical infrastructure for a new financial system, including digital asset investment products and services.
Avoiding Short-Sightedness
The letter concluded by urging MSCI to reject the 50% threshold, citing the risk of stifling innovation, damaging index integrity, and undermining federal strategy, and recommended that MSCI allow the market to continue evolving and conduct more thorough consultation before considering any policy that would differentiate DATs from other operating companies, including those focused on digital asset investment.
The company invoked MSCI’s precedent in reorganizing the Communication Services sector after nearly two decades of industry evolution, suggesting a measured, deliberative approach to index construction, including those related to digital asset investment.
“History shows that when foundational technologies have emerged, institutions that prospered allowed markets to test them rather than throttling them in advance,” Strategy wrote, urging MSCI to take a similar approach to digital asset treasuries and digital asset investment.
“MSCI can either succumb to short-sightedness or allow its indices to reflect, neutrally and faithfully, the next era of financial technology,” the company added, highlighting the importance of taking a long-term view and avoiding arbitrary restrictions on digital asset investment.
Elsewhere, companies like Strive and Bitcoin For Corporations also challenged MSCI’s decision, demonstrating the growing opposition to the proposed threshold and the importance of considering the impact on the digital asset economy and digital asset investment opportunities.
