While discussions are growing that Bitcoin-focused company Strategy (formerly MicroStrategy) could be removed from MSCI indices, the company’s chairman, Michael Saylor, maintained that the operating model is robust and that this possibility will not affect the company’s roadmap.
MSCI has proposed removing “digital asset treasury companies” whose portfolios consist largely of cryptocurrencies from its indexes. While it noted that such companies “may exhibit characteristics similar to mutual funds,” it stated that these structures are not suitable for the indexes. The final decision will be announced on January 15th.
In his latest post, Saylor explained that Strategy is an operating company. He pointed out that, in addition to its Bitcoin reserves, it also has a $500 million enterprise software division that has been serving corporations and public institutions for over 20 years.
Saylor stated, “We understand that index providers periodically review their methodologies, but Strategy is not an ETF, it is not a closed-end fund, and it is certainly not a passive proxy for Bitcoin. We produce, operate, and grow just like any other business.” He added that inclusion or removal from the index would not change the company's strategy, operations, or long-term belief in BTC.
JPMorgan issued a note this week warning that Strategy's removal from the index could lead to billions of dollars in passive outflows. Analysts estimate that a potential removal from MSCI could lead to a $2.8 billion outflow from passive funds. Overall, approximately $9 billion of Strategy's market capitalization is estimated to be tied to passive, index-tracking ETFs and mutual funds.
The sharp decline in Bitcoin's price is also putting pressure on Strategy shares, which have lost nearly 40% of their value this year.
*This is not investment advice.
