MSCI's New Methodology Threatens Strategy's Index Inclusion

Strategy, a company known for its massive Bitcoin holdings, faces exclusion from major global indices due to MSCI's new methodology.

In January, MSCI had initially planned to exclude companies whose digital assets made up at least 50% of their balance sheet. After backing down, the index provider is now using a more complex approach that looks beyond just cryptocurrency holdings.

The new method identifies 'non-operating companies' by examining five financial ratios, including operating asset weight and external financing dependence. Strategy's massive Bitcoin reserves put it in danger of falling short on these metrics.

Strategy has responded to MSCI's plan, arguing that digital assets should be treated as any other asset and not dictate a company's index inclusion. The debate raises questions about the boundaries between traditional companies and investment vehicles.