Strategy strongly defends MSCI: DAT's "identity defense battle"

Original author: KarenZ, Foresight News

The struggle over the development of the digital asset treasury (DAT) industry continues.

In October, global index provider MSCI proposed excluding companies with digital asset holdings of 50% or more of their total assets from its global investable market indices. This move directly threatens the market position of digital asset treasury companies like Strategy, and could even reshape the capital flows of the entire digital asset treasury sector.

According to data compiled by Bitcoin for Corporations, 39 companies may be excluded from the MSCI World Investable Market Index. JPMorgan analysts previously warned that the removal of Strategy alone could result in nearly $2.8 billion in passive capital outflows, and if other index providers follow suit, it could cause outflows of up to $8.8 billion.

Currently, MSCI's consultation period for this proposal will continue until December 31, 2025, and the final conclusion is expected to be announced before January 15, 2026. If there are any adjustments, they will be formally implemented in the index review process in February 2026.

Faced with this pressing situation, Strategy submitted a strongly worded 12-page open letter to the MSCI Equity Index Committee on December 10th, jointly signed by Executive Chairman and Founder Michael Saylor and President and CEO Phong Le, clearly expressing its firm opposition to the proposal. The letter stated bluntly: "This proposal is seriously misleading and will have profound and destructive consequences for the interests of global investors and the development of the digital asset industry. We strongly urge MSCI to completely withdraw this plan."

Strategy's four core defenses

Digital assets are a revolutionary foundational technology that is reshaping the financial system.

Strategy argues that MSCI's proposal underestimates the strategic value of Bitcoin and other digital assets. Since Satoshi Nakamoto introduced Bitcoin 16 years ago, this digital asset has grown into a key component of the global economy, with a current market capitalization of approximately $1.85 trillion.

Strategy believes that digital assets are not simply financial instruments, but a fundamental technological innovation that can reshape the global financial system . Companies investing in Bitcoin-related infrastructure are building a completely new financial ecosystem, which is no different from leading companies that have historically focused on a single emerging technology.

Just as Standard Oil in the 19th century focused on deep well drilling and AT&T in the 20th century invested heavily in building its telephone network, these companies laid a solid foundation for subsequent economic transformation and ultimately became industry benchmarks through forward-looking investments in core infrastructure. Strategy believes that companies focusing on digital assets today are repeating this path of "technology pioneers" and should not be simply dismissed by traditional index rules.

DAT is an operating company, not a passive fund.

This is the core argument of Strategy's defense— Digital Asset Treasury (DAT) is an operating company with a complete business model, not just an investment fund that passively holds Bitcoin . Although Strategy currently holds more than 600,000 Bitcoins, its core value does not depend on Bitcoin price fluctuations, but rather on creating sustainable returns for shareholders through the design and launch of unique "digital credit" instruments.

Specifically, Strategy's "digital lending" instruments encompass various types, including preferred shares with fixed dividend rates, floating dividend rates, different priority levels, and credit protection clauses. Funds raised through the sale of these instruments are then used to increase Bitcoin holdings. As long as the long-term investment return on Bitcoin exceeds Strategy's dollar-denominated financing costs, it can generate stable returns for shareholders and clients. Strategy emphasizes that this "active operation + asset appreciation" model is fundamentally different from the passive management logic of traditional investment funds or ETFs and should be considered a normal operating business.

In the letter, Strategy also raised questions: Why are oil giants, real estate investment trusts (REITs), and timber companies allowed to hold concentrated assets in a single category, yet not classified as investment funds and excluded from indices? Imposing special restrictions only on digital asset companies clearly does not conform to the principle of industry fairness.

The 50% digital asset threshold is arbitrary, discriminatory, and unrealistic.

Strategy points out that MSCI's proposal employs discriminatory standards. Many large companies in traditional industries also have highly concentrated holdings in single asset classes, including oil and gas companies, real estate investment trusts, timber companies, and power infrastructure businesses. However, MSCI has established special exclusion criteria only for digital asset companies, which constitutes clear unfair treatment.

From a feasibility standpoint, the proposal also presents serious problems. Due to the extreme volatility of digital asset prices, the same company could be repeatedly included or excluded from the MSCI index within a few days due to changes in asset value, causing market confusion. Furthermore, differences between accounting standards (US GAAP and international IFRS treat digital assets differently) will lead to companies with the same business model receiving different treatment depending on their place of registration.

Violating the principle of index neutrality, injecting policy bias.

Strategy argues that MSCI's proposal essentially constitutes a value judgment on a particular asset class, violating the fundamental principle that index providers should remain neutral. MSCI claims to the market and regulators that its indices provide "comprehensive" coverage to reflect "the evolution of the underlying stock market," and should not make "judgments on the good or bad or appropriateness of any market, company, strategy, or investment."

By selectively excluding digital asset companies, MSCI is effectively making policy judgments on behalf of the market, which is something index providers should avoid.

Contrary to the US digital asset strategy

Strategy specifically points out that the proposal conflicts with the Trump administration's strategic goal of advancing digital asset leadership . In its first week in office, the Trump administration signed executive orders to promote the growth of digital financial technologies and established a strategic Bitcoin reserve, aiming to make the United States a global leader in the digital asset space.

However, if MSCI's proposal is implemented, it will directly prevent long-term funds such as US pension funds and 401(k) plans from investing in digital asset companies, resulting in billions of dollars of capital flowing out of the industry. This will not only hinder the development of innovative US digital asset companies, but may also weaken the US's competitiveness in this strategic field, running counter to the government's established policy direction.

According to analysts' estimates cited by Strategy, Strategy alone could face up to $2.8 billion in passive stock liquidation due to MSCI's proposal. This would not only harm Strategy itself but also have a chilling effect on the entire digital asset ecosystem. For example, it could force Bitcoin mining companies to sell assets prematurely to adjust their asset structure, thereby distorting the normal supply and demand relationship in the digital asset market.

Strategy's ultimate goal

Strategy made two main demands in its open letter:

First, we hope that MSCI will completely withdraw the removal proposal , allowing the market to test the value of Digital Asset Treasury (DAT) companies through free competition, so that the index can neutrally and faithfully reflect the development trend of next-generation financial technology.

Secondly, if MSCI insists on "special treatment" of digital asset companies, it needs to expand the scope of industry consultation, extend the consultation period , and provide more sufficient logical support to explain the rationality of the rules.

Strategy is not fighting alone.

Strategy is not fighting alone. According to data from BitcoinTreasuries.NET, as of December 11, 208 publicly listed companies worldwide held more than 1.07 million Bitcoins, exceeding 5% of the total Bitcoin supply , with a current value of approximately $100 billion.

Source: BitcoinTreasuries.NET

These digital asset treasury companies have become an important bridge for institutional adoption of cryptocurrencies, providing compliant indirect exposure for traditional financial institutions such as pension funds and endowments.

Previously, Strive, a publicly traded company holding Bitcoin, suggested that MSCI should return the "option" for digital asset companies to the market. A simple and direct solution is to create a version of existing indices that excludes digital asset treasury companies , such as the MSCI USA ex Digital Asset Treasuries index and the MSCI ACWI ex Digital Asset Treasuries index. This transparent screening mechanism would allow investors to choose their own benchmarks, preserving the integrity of the indices while meeting the needs of different investors.

Furthermore, the industry organization Bitcoin for Corporations has launched a joint initiative urging MSCI to withdraw its digital asset proposal, arguing that classification should be based on companies' actual business models, financial performance, and operational characteristics, rather than simply on asset percentages. According to the organization's website, 309 companies and investors have already signed the joint letter. Signatories include executives from well-known industry players such as Strive, BitGo, Redwood Digital Group, 21MIL, BTC Inc., and DeFi Development Corp., as well as numerous individual developers and investors, in addition to Strategies.

summary

The standoff between Strategy and MSCI is essentially a fundamental debate about how emerging financial innovations can be integrated into the traditional system. Digital Asset Treasury (DAT), as a "crossover" between the traditional financial and cryptocurrency worlds, is neither a pure technology company nor a simple investment fund, but rather a completely new business model built on digital assets.

MSCI's proposal attempts to classify these complex entities as "investment funds" and exclude them from the index using a "50% asset allocation" standard; Strategy, however, insists that such simplification is a serious misunderstanding of their commercial nature and a departure from the principle of index neutrality. With the decision date approaching January 15, 2026, the outcome of this game will not only determine the index "eligibility" of several publicly listed companies holding Bitcoin, but will also define a crucial "survival boundary" for the future position of the digital asset industry within the global traditional financial system.

Source reference:

https://assets.contentstack.io/v3/assets/bltf8d808d9b8cebd37/blt26a263f232aa531c/693976b64c2a191113a60111/strategy-msci-letter.pdf

https://app2.msci.com/webapp/index_ann/DocGet?pub_key=0bZz7Im3vZU%3D&lang=en&format=html

https://x.com/ColeMacro/status/1996930014441623902