Recently, MSCI announced the potential removal of companies like Strategy from their indices. The institution plans to declare its decision on January 15, with JPMorgan expressing doubts in its reports. The decline observed in November partly stemmed from this announcement. However, Saylor remains determined not to give up.
The Argument Against Exclusion
A letter signed by Michael Saylor and CEO Phong Le argues against the removal of digital asset treasury companies (DATs) from the MSCI index. This 12-page document represents the last effort before the decision date. MSCI’s proposal to exclude these companies aligns with their performance similar to funds, as observed in Global Investment Market Indices.
Strategy contends that DATs function as operational companies and disputes the arbitrary 50% cryptocurrency reserves threshold. They believe the proposal integrates inappropriate policy factors into index construction. Furthermore, they highlight potential risks to innovation from such exclusion.
The Industry’s Call for MSCI’s Neutral Stance
“We urge MSCI to reject this proposal,” the company states, arguing that the suggestion mischaracterizes DATs and introduces unfeasible conditions that would stifle innovation. Such a decision could harm MSCI’s reputation and clash with national priorities. History shows that institutions allowing markets to test foundational technologies have succeeded. Now, as digital assets reach a pivotal point, MSCI must choose whether to maintain its neutrality or react with a short-term perspective.
The fear of delisting has already hinted at possible significant plummets in the crypto market by January 15. Many funds track and invest in MSCI indices automatically. For companies like MSTR involved with crypto reserves, this passive investment approach draws significant capital. It is estimated that passive investments within MSTR holders reach $8 billion, and any delisting could severely impact their MNAV score, already struggling.
Consequently, Strategy’s letter today calls for “neutrality” from MSCI, not to be labeled as “uninvestable.” MSCI presents itself as the unbiased provider of comprehensive indices, reflecting ‘the development of core stock markets’ without judging any market, company, strategy, or investment as good or bad.
However, implementing this proposal could breed concerns about the impartiality of MSCI indices, as it would introduce a digital-asset-specific criterion lacking historical grounding in index practice. Technologies like Bitcoin symbolize innovation and the future potential foundation of global financial systems and economic growth engines. As the US strives for leadership in digital asset technologies, any action weakening this innovative field would be ill-timed.