Strategy Inc. Opposes MSCI’s Plan to Exclude DATs from Key Indexes

• Strategy Inc. criticizes MSCI’s 50% digital asset threshold as arbitrary and damaging to innovation.
• DATs function as businesses, not passive investment funds, similar to banks and insurers.
• Excluding DATs would limit access to passive capital and diminish U.S. competitiveness in digital assets.

Strategy Inc., the largest Bitcoin treasury company globally, has provided an in-depth response to MSCI’s consultation regarding the classification of Digital Asset Treasury Companies (DATs). MSCI has suggested excluding companies from its Global Investable Market Indexes if their digital asset holdings make up 50% or more of their total assets.

In an executive letter of December 10, signed by its Executive Chairman Michael Saylor and CEO Phong Le, Strategy Inc. claims that this proposal is misconceived and would have far-reaching, adverse impacts on capital markets, innovation, and US leadership in digital assets.

Strategy states that Digital Asset Treasury Companies (DATs) such as theirs are businesses and not dormant investment funds. It points out that it does not merely store Bitcoin but operates a Bitcoin-backed corporate treasury and capital markets program. 

Bitcoin Exposure Through Equity and Fixed-Income Securities

This scheme issues different equity and fixed-income securities, which provide the investor with varying levels of exposure to Bitcoin. This company compares its model with banks and insurers who realized a spread between the cost to finance and returns on assets.

The plan also shows the focus of numerous conventional companies, such as the oil majors, REITs, timber companies, and media companies, on one category of assets. However, they are neither manipulated as money nor left out of indices. It claims that it would be discriminatory and uneven to focus on digital asset-intensive balance sheets.

Strategy claims that the digital asset threshold of 50% suggested by MSCI is arbitrary and unrealistic. With the unpredictability of crypto prices and varying accounting principles (GAAP and IFRS), firms might be put on and off MSCI indices as markets change. These changes would weaken the stability of the index and erode the confidence of the investors.

Also Read: Strategy CEO Proposes Bitcoin-Powered Digital Accounts for Global Deposits

The letter goes on to criticize MSCI as injecting policy choices into index construction that do not reflect its mandate, where it is a neutral provider of all-round benchmarks that mirror market evolution. It contends that MSCI is not supposed to designate some types of business models as either good or bad. 

Strategy Warns Excluding DATs Weakens US Competitiveness

Omission of DATs and Strategy claims would distort a fast-expanding area of the economy and raise concerns on the objectivity of MSCI indices.

The strategy also argues that the proposal goes against the pro-innovation digital asset agenda under the current US administration, which has such initiatives as the Strategic Bitcoin Reserve and is trying to increase the availability of digital assets in retirement plans.

The company claims that keeping DATs out of key benchmarks would reduce accessibility to passive capital, hinder invention, and undermine the competitiveness of the US in this strategically valuable industry.

Strategy would encourage MSCI to rule out the proposal entirely or, at least, would increase the consultation period during which the model of a digital asset treasury would continue to develop closely. The letter argues that MSCI should remain neutral and allow the markets to determine the future of DATs.

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