Strategy responds to MSCI letter, makes case for index inclusion

Strategy, the largest Bitcoin treasury company, submitted feedback to scale institution MSCI connected Wednesday astir the projected argumentation alteration that would exclude integer plus treasury companies holding 50% oregon much successful crypto connected their equilibrium sheets from banal marketplace scale inclusion.

Digital plus treasury companies are operating companies that tin actively set their businesses, according to the letter, which cited Strategy’s Bitcoin-backed recognition instruments arsenic an example.

The proposed argumentation change would bias the MSCI against crypto arsenic an plus class, alternatively of the scale institution acting arsenic a neutral arbiter, the missive said.

The archetypal leafage of Strategy’s missive to the MSCI pushes backmost against the projected eligibility criteria change. Source: Strategy

The MSCI does not exclude different types of businesses that put successful a azygous plus class, including existent property concern trusts (REITs), lipid companies and media portfolios, according to Strategy. The missive said:

“Many fiscal institutions chiefly clasp definite types of assets and past bundle and merchantability derivatives backed by those assets, similar residential mortgage-backed securities.”

The missive besides said implementing the alteration “undermines” US President Donald Trump’s extremity of making the United States the planetary person successful crypto. However, critics reason that including crypto treasury companies successful planetary indexes poses respective risks.

Related: Strive calls connected MSCI to rethink its ‘unworkable’ Bitcoin blacklist

Crypto treasury companies tin make systemic risks and spillover effects

Crypto treasury companies grounds characteristics of concern funds, alternatively than operating companies that nutrient goods and services, according to MSCI.

MSCI noted that companies capitalized connected cryptocurrencies deficiency wide and azygous valuation methods, making due accounting a challenging task and perchance skewing scale values.

Strategy held 660,624 BTC connected its equilibrium expanse astatine the clip of this writing. The banal has mislaid implicit 50% of its worth implicit the past year, according to Yahoo Finance.

Bitcoin (BTC) is besides 15% beneath its worth astatine the opening of 2025, erstwhile it was trading implicit $109,000, meaning that the underlying plus has outperformed the equity wrapper.

The high volatility of cryptocurrencies whitethorn heighten the volatility of the indexes tracking these companies oregon make correlation risks, wherever the scale show would reflector crypto marketplace performance, according to a paper from the Federal Reserve.

Bitcoin and Ether volatility compared to banal indexes, lipid and gold. Source: The Federal Reserve

The “common use” of leverage by crypto traders amplifies volatility and lends to crypto’s fragility arsenic an plus class, the Federal Reserve wrote.

MSCI’s projected argumentation change, acceptable to instrumentality effect successful January, could besides punctual treasury companies to divest their crypto holdings to conscionable the caller eligibility criteria for scale inclusion, creating further selling unit for integer plus markets.

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