Strategy CEO Challenges MSCI Bitcoin Exclusion Proposal

• Strategy CEO compares MSCI’s crypto exclusion proposal to penalizing Chevron for holding oil assets on its balance sheet.
• MSCI consulting on removing firms with over 50% digital assets from indexes through the December 31st deadline.

Strategy​‍​‌‍​‍‌​‍​‌‍​‍‌ CEO Phong Le disagreed with MSCI’s idea of removing companies that have a large amount of crypto on their financials from their index, saying that the move was unfair and that it did not match the way traditional industries were treated. Le argues that the move by the index provider to consider the exclusion of companies whose treasuries are dominated by digital assets in the October announcement is at odds with the way firms in the traditional sector have been ​‍​‌‍​‍‌​‍​‌‍​‍‌handled. 

CEO Draws Parallels with Traditional Industries

Phong Le​‍​‌‍​‍‌​‍​‌‍​‍‌ made an analogy between the removal of the proposed exclusion and a situation in which the big energy company Chevron would be penalized simply for having large oil reserves or the timber company Weyerhaeuser for owning a vast amount of wood resources. He pointed out that Simon Property Group is in the same way a company that has a lot of real estate but is not facing any risk of being taken out of the indexes. 

The Strategy CEO was worried that the proposal signalled a very early intervention in a newly-fledged sector, which could limit the industry’s potential for growth and innovation. He compared this to the hypothetical situation of prohibiting telecommunications companies from installing cell towers in the eighties and disallowing AI companies from investing in computational infrastructure ​‍​‌‍​‍‌​‍​‌‍​‍‌nowadays. 

Le​‍​‌‍​‍‌​‍​‌‍​‍‌ also disagreed with MSCI’s description of digital asset treasury companies as solely investment funds, arguing that they should be seen as operational businesses. He cited Strategy’s 30-year history of being a publicly traded operating company as an example. 

The manager brought up his time as the chief financial officer since 2015 and the company’s uninterrupted public listing since ​‍​‌‍​‍‌​‍​‌‍​‍‌1998.

On​‍​‌‍​‍‌​‍​‌‍​‍‌ the very day, Strategy went ahead and submitted a formal response to MSCI. They stated that the proposal leads to a bias against cryptocurrency as an asset class instead of being a neutral oversight. The window for the consultation is open until December 31, with the final decisions being made around mid-January and the implementation possibly starting in February.

Charlie Sherry, an executive at an Australian crypto exchange, stated that based on the opinion of industry watchers, MSCI hardly ever makes such consultations without a decision in favour of the implementation. The result can be a major factor in the shift of institutional investors’ perception of companies heavily involved in digital asset ​‍​‌‍​‍‌​‍​‌‍​‍‌holdings.

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