MicroStrategy is challenging a new MSCI proposal that could remove the Bitcoin-heavy company from major global stock indexes, arguing that index providers should reflect markets rather than decide what assets companies are allowed to own.
MSCI is considering a new definition for “non-operating companies,” using a two-step test that looks at operating assets and several financial ratios. If the proposed rules had been applied using May data, Strategy, Metaplanet and Yellow Cake would have been excluded from the MSCI ACWI IMI.
The issue matters because index exclusion can lead to forced selling by funds that automatically track MSCI benchmarks. One estimate suggests Strategy could face as much as $2.8 billion in passive outflows if the proposal goes ahead.
Strategy argues that companies should not be penalized simply because a large part of their balance sheet is held in Bitcoin. The company maintains that it remains an operating business and that MSCI’s role should be to measure the market, not influence corporate asset allocation.
MSCI is accepting feedback until September 30, with a decision expected on October 16. Any changes would take effect during the November index review.
Investor takeaway: The biggest risk for Strategy is not a change in its Bitcoin strategy itself, but the possibility that index exclusion triggers billions of dollars in passive selling.
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