MSCI officially announced yesterday that it will not remove "Digital Asset Treasuries" (DATs) holding large amounts of Bitcoin from its global investable market indices for the time being. This decision directly averted a crisis of hundreds of billions of dollars in passive fund outflows for companies like MicroStrategy, boosting MSTR's stock price by nearly 7% in after-hours trading.
MSCI decides to retain MicroStrategy and other DAT products in its index.
In October of last year, MSCI, one of the world's largest index providers, launched a consultation aimed at excluding digital asset finance companies (DATs) such as MicroStrategy, MARA Holdings, and Riot Platforms from its indices, as DATs may exhibit characteristics similar to investment funds and do not meet the eligibility criteria for MSCI indices. MSCI recommended excluding companies whose cryptocurrency holdings account for more than 50% of their total assets from the MSCI World Investable Markets Indices.
MSCI announced on January 6th that, after extensive consultation with global institutional investors, it had decided to temporarily suspend the exclusion clauses for digital asset companies. Feedback from the investment community indicates that disagreements remain regarding how to define the line between an "operating company" and an "investment vehicle." Therefore, MSCI chose to maintain the status quo.
However, the announcement also mentioned that MSCI will continue to monitor market developments and may conduct a broader review of the definition of "investment entities" in the future. This means that although specific provisions for "digital assets" have been temporarily shelved, MSCI still retains the right to adjust their weightings by revising the broader rules.
MSTR shares surged nearly 7% in after-hours trading.
Encouraged by this news, MSTR's stock price surged nearly 7% in after-hours trading, reversing its recent downward trend.
Since many global ETFs and pension funds automatically allocate their portfolios based on MSCI indices, the removal of a company from the index would trigger a massive forced sell-off. Conversely, maintaining eligibility means that micro-strategies can continue to benefit from buying support from index funds. Staying within the index ensures that the stock enjoys high market liquidity and reduces the isolation risk caused by volatility in a single asset class (Bitcoin).
This article, "Micro Strategy Retains MSCI Index, MSTR Surges Nearly 7% After Hours," first appeared on ABMedia, a ABMedia .
