Strategy Inc. Challenges MSCI Index Proposal Targeting Bitcoin Treasury Firms

Strategy Inc., led by Executive Chairman Michael Saylor and CEO Phong Le, has submitted a formal response to MSCI’s latest consultation on index eligibility. The company argues that the proposed screening methodology unfairly targets firms that hold bitcoin as a core part of their treasury strategy.

Key Points of the Objection

• Strategy says the MSCI test misclassifies its bitcoin holdings as non‑operating assets.
• The proposal could remove Strategy and two other firms from MSCI’s Global Investable Market Indexes.
• Funds tracking MSCI GIMI indexes currently hold about 13 million Strategy shares, representing roughly 3.1% of its basic shares outstanding and 60% of its 30‑day average daily trading volume.

How MSCI’s Proposed Test Works

MSCI opened a consultation on August 3, proposing a two‑stage screening process. Companies whose operating assets exceed 50% of total assets remain eligible. Those that fail face five financial measurements—operating assets, operating expenses, operating cash flow, fair‑value changes, and dependence on external financing. Triggering at least four flags could make a company ineligible after consecutive annual reviews.

Strategy’s Defense of Its Bitcoin Operations

Strategy contends that its bitcoin treasury is an operating segment, with gains and losses recorded within operating expenses. The firm also runs an enterprise analytics software business with about 1,500 employees and nearly $500 million in annual revenue, and it issues bitcoin‑backed credit instruments, distinguishing it from a passive investment fund.

Timeline and Potential Impact

• Consultation closes on September 30.
• MSCI expects to announce its decision by October 16.
• Any constituent changes would be announced on November 11 and become effective December 1.

Strategy maintains that removal from the indexes would not materially affect its business operations.