Strive Urges MSCI to Rethink Proposal Excluding Major BTC Holders

Strive, a firm listed on Nasdaq and recognized as the 14th largest public holder of Bitcoin, is calling on MSCI to reconsider its plan to exclude companies with significant digital asset exposure from its global indexes.

Key Takeaways:

Strive argues that MSCI’s plan to exclude companies heavily invested in crypto would limit investor access to essential growth sectors.
JPMorgan warns that the proposal could lead to losses of up to $2.8 billion for strategies including major Bitcoin treasury companies.
Strive highlights the importance of Bitcoin-focused companies in key industries such as AI and structured finance, deeming the exclusion proposal unfair.

In a letter to MSCI's chairman and CEO Henry Fernandez, Strive expressed concern that the proposed exclusion of firms with crypto holdings exceeding 50% of their total assets could deny passive investors access to rapidly growing segments of the market.

Strive Urges MSCI to Scrap Proposal Excluding Major BTC Holders

JPMorgan Highlights Potential $2.8B Loss from MSCI Proposal

JPMorgan analysts have recently issued a warning that a significant Bitcoin treasury company, known as Strategy, which is part of the MSCI World Index, could suffer losses up to $2.8 billion if these exclusion measures are enacted.

Michael Saylor, the chair of Strategy, confirmed that the company is in ongoing discussions with MSCI in an effort to prevent such a decision.

Strive's CEO Matt Cole contended that the proposal fails to recognize the critical role that large Bitcoin-centered firms play in emerging sectors, especially artificial intelligence.

He pointed out that companies like MARA Holdings, Riot Platforms, and Hut 8 are potential targets for exclusion but are also expanding rapidly into AI infrastructure by adapting their data centers to handle high-demand computing workloads.

“Analysts increasingly suggest that the race in AI is limited more by energy access than by semiconductor availability,” Cole noted, emphasizing that miners are well-equipped to meet this demand.

Even with the anticipated rise in AI revenue, Cole asserted that these companies will continue to hold substantial Bitcoin reserves. Thus, MSCI’s exclusion could effectively separate a sector that sits at the crossroads of digital assets and cutting-edge computing.

Cole also mentioned the growing interest in financial products linked to Bitcoin. Companies like Strategy and Metaplanet operate similarly to banks by providing equity-based access to Bitcoin performance through structured BTC notes, thus allowing investors to benefit without directly holding the cryptocurrency.

He warned that excluding these treasury firms would create an unlevel playing field, giving an advantage to traditional financial institutions like JPMorgan, Morgan Stanley, and Goldman Sachs, as index-linked investments would become skewed against businesses that focus on Bitcoin exposure.

Strive Critiques MSCI's 50% Rule for Index Eligibility

Strive further questioned the feasibility of MSCI's 50% threshold, noting that linking index eligibility to such a volatile asset would result in companies frequently moving in and out of the index, which could increase tracking errors for funds reliant on them.

Cole cited Trump Media & Technology Group as an illustrative case. Despite boasting one of the largest public Bitcoin treasuries, it narrowly escaped MSCI's initial exclusion list because its current Bitcoin exposure hovers just below the threshold.

Instead of implementing a blanket rule, Strive proposed creating an alternative version of MSCI's indexes labeled “ex-digital asset treasury.” This would enable asset managers who prefer not to include crypto-heavy companies in their portfolios to opt out, while still allowing others to access the full spectrum of investment opportunities.

As of now, MSCI has not communicated any plans to alter its proposal, but the pressure from the industry is growing as treasury-focused firms await a conclusive decision.