Strategy Pushes Back Against MSCI Index Exclusion Proposal

Strategy, an enterprise software company that holds significant amounts of Bitcoin, has pushed back against MSCI's proposed overhaul of inclusion rules for its global stock indexes. In a formal letter, the company's founder and CEO criticized MSCI's attempt to exclude companies with large digital asset holdings from eligibility for the Global Investable Market Index.

Strategy argues that MSCI's proposal is discriminatory, arbitrary, and wrong, as it relies on an unprecedented classification standard that defines Bitcoin as a 'non-operating' asset. The company claims that it reports its Bitcoin business as an operating segment and treats Bitcoin valuation gains and losses as operating costs.

The dispute centers around MSCI's plan to add a definition for 'non-operating companies,' which could exclude Strategy and other companies with significant Bitcoin holdings from major indexes used by institutional investors. If adopted, the proposal would have a practical impact on Strategy's business, but the company believes it would cause major damage to MSCI's reputation.

Strategy holds 845,050 Bitcoins, worth around $65.8 billion at current prices, and uses its Nasdaq-listed stock, MSTR, as a way for investors to gain amplified exposure to Bitcoin price moves. The share price reacted immediately to the news, ending trading up 4 percent on August 31.