MicroStrategy has opposed Morgan Stanley Capital International's (MSCI) proposal to remove companies holding significant amounts of Bitcoin from major stock indices, arguing that the regulation mistreats these businesses as investment funds.
This response comes after JPMorgan warned that the move could lead to a multi-billion dollar sell-off, placing Strategy at the center of a broader debate about how to regulate access to Bitcoin in the mainstream market.
A strategy to protect its business model.
Strategy (formerly known as MicroStrategy) issued an official statement on Wednesday, arguing that MSCI's proposal fundamentally misunderstands how companies holding large amounts of Bitcoin operate.
In a 12-page letter signed by Executive Chairman Michael Saylor and Chairman Phong Le, the company asserted that it is a business operating in the Bitcoin market, using its Bitcoin reserves to issue credits and raise Capital.
The company emphasizes that this approach is entirely different from passive Investment Vehicles that simply track an asset.
“We urge MSCI to remove this proposal. The proposal is based on a broad misunderstanding of DATs and would create unreasonable conditions, hinder implementation, stifle innovation, damage the credibility of MSCI indices, and conflict with national priorities,” the letter stated.
Strategy also argues that the 50% threshold for digital assets is discriminatory. The company points out that this rule targets them but ignores other sectors that also focus on digital assets, such as oil and gas or real estate.
Consultations could put Bitcoin treasuries at risk.
The controversy began in October 2023, when MSCI opened consultations on how to classify digital asset treasuries (DATs) in its index criteria methodology. The proposed 50% threshold immediately put Strategy and other Bitcoin-focused companies under XEM .
In November 2023, analysis from JPMorgan indicated that Strategy could face a sell-off risk of up to $2.8 billion if MSCI removed only the company, and potentially as much as $8–9 billion if other index providers followed suit.
These predictions have drawn more public attention and reignited the debate about how to classify companies holding Bitcoin reserves within the index ecosystem.
For Strategy, the consequences extend far beyond whether or not it falls under the category of indicators.
If excluded, the company's liquidation could decrease and the cost of raising Capital could increase. This could also narrow the role of corporate treasuries as an option for investors seeking indirect exposure to Bitcoin.
For investors in general, this story raises questions about market structure: should exposure to Bitcoin be primarily through managed ETFs , or is it still appropriate to do so through publicly traded companies holding digital assets on their balance sheets?
MSCI's consultation process will remain open until December 31, 2023, and investors are closely watching the final decision from the index provider.
