Strategy Slams MSCI’s Flawed Index Test

Strategy Calls MSCI Test a Reworked Crypto Exclusion

Strategy Inc. (Nasdaq: MSTR) urged MSCI on Aug. 31 to withdraw an eligibility test that could remove the company from its Global Investable Market Indexes. In a formal response signed by Executive Chairman Michael Saylor and CEO Phong Le, the company called the methodology “discriminatory, arbitrary, and misguided.”

The company said funds tracking MSCI GIMI indexes hold approximately 13 million MSTR shares, equal to 3.1% of Strategy’s basic shares outstanding and 60% of its 30-day average daily trading volume. Its public campaign opposing the proposal says removal would not meaningfully affect the business. Saylor stated on X:

“MSCI should be a mirror of the market, not an arbiter of it.”

The dispute follows an earlier Strategy challenge to MSCI after the index provider proposed a broader test for non-operating companies. Strategy argues the new methodology repackages MSCI’s withdrawn 2025 proposal, which targeted companies whose digital asset holdings represented at least 50% of total assets.

How MSCI’s Proposed Index Test Works

The index provider opened its latest consultation Aug. 3, proposing to expand existing exclusions for investment funds and business development companies. MSCI said companies displaying similar financial characteristics could also become ineligible, even when their legal structures do not identify them as funds.

Under the proposed two-stage screening methodology, companies whose operating assets exceed 50% of total assets would remain eligible. Those failing that test would face five measurements covering operating assets, operating expenses, operating cash flow, fair value changes, and dependence on external financing.

Companies triggering at least four financial flags could become ineligible. Existing index constituents would receive less restrictive thresholds and must fail the assessment during two consecutive annual reviews before deletion, while companies outside the indexes could become ineligible after one review.

MSCI’s simulation using May data identified Strategy, Japan-based Metaplanet, and uranium investment company Yellow Cake as potential deletions from the MSCI ACWI Investable Market Index. Strategy represented approximately $23.93 billion of the $27.55 billion in combined float-adjusted market capitalization across the six companies facing deletion or watchlist placement.

Strategy Defends Bitcoin as an Operating Business

Strategy rejects MSCI’s apparent classification of bitcoin as a non-operating asset. A corporate bitcoin treasury typically raises capital or uses operating funds to acquire bitcoin as a reserve asset, although dedicated treasury companies make that strategy a central part of their business models.

The company said neither U.S. generally accepted accounting principles nor International Financial Reporting Standards classify assets as operating or non-operating in the manner MSCI proposes. Strategy reports its bitcoin treasury operations as a separate operating segment and records bitcoin gains and losses within operating expenses, according to the response.

Strategy also maintains an enterprise analytics software business with approximately 1,500 employees and nearly $500 million in annual revenue. The company issues bitcoin-backed credit instruments and other securities intended to create value from its bitcoin holdings, distinguishing its structure from a passive investment fund.

MSCI retained digital asset treasury companies in its indexes in January after withdrawing its earlier proposal. It said at the time that it would conduct a broader consultation covering non-operating, investment-oriented companies rather than digital asset holders alone.

The current consultation closes Sept. 30, with MSCI expected to announce its decision by Oct. 16. Potential constituent changes would be announced Nov. 11 and become effective Dec. 1 if MSCI adopts the methodology.