MicroStrategy demands that MSCI Index withdraw its proposal to “remove MSTR”: the 50% currency holding red line is baseless and is stifling American innovation!

MicroStrategy issued a 12-page formal letter of protest to index compilation giant MSCI, strongly demanding that MSCI withdraw its proposal to exclude digital assets such as Bitcoin from the major index if it holds more than 50% of its total assets.
(Previous summary: Wall Street boycotts DAT? MSCI considers MicroStrategy and other "crypto reserve companies" to be excluded from index components)
(Background supplement: Michael Saylor responded to "MicroStrategy may be excluded from the MSCI index": Our Bitcoin business is unique and the index classification cannot be defined)

Contents of this article

The world's largest corporate Bitcoin holder MicroStrategy (formerly MicroStrategy, now Strategy), on December 10 Japanese index compilation giant MSCI (Morgan Stanley Capital International) issued a 12-page formal letter of protest, strongly demanding that MSCI withdraw its proposal that "if digital assets such as Bitcoin held by digital asset treasury companies (DATs) exceed 50% of their total assets, they will be excluded from the major index."

MicroStrategy warns that if this rule is forcibly implemented, it will cause violent shocks and run counter to the U.S. government’s policy of actively promoting digital asset innovation.

Background review of the incident

This controversy began with MSCI's consultation on "digital asset treasury companies." MSCI considered companies with a high proportion of Bitcoin holdings to be treated as entities similar to investment funds rather than traditional operating companies, and therefore planned to exclude such companies from the MSCI Global Investable Market Indexes. Once the proposal is passed, micro-strategies will be the first to be kicked out of mainstream indexes such as MSCI World and MSCI USA. Analysts estimate that this may trigger passive selling pressure of US$2.8 billion to US$8.8 billion.

Core propositions of micro-strategy

1. The 50% threshold is "arbitrary and cannot be implemented consistently"

Micro-strategy criticizes that the 50% red line is completely artificial and lacks reasonable basis. Many traditional companies hold a high proportion of oil, real estate or utility assets, but have never been excluded. Only against Bitcoin treasury companies, MSCI has an obvious policy bias.

More serious is the difference in accounting treatment. According to U.S. GAAP, Strategy must revalue its Bitcoin holdings at fair value every quarter; while overseas companies using IFRS can price them at cost. The result of this is that U.S. companies are more likely to step on the 50% red line due to large book fluctuations, but overseas companies with the same currency holdings can safely stay in the index. Strategy believes that "the fate of the exact same business is completely different due to different accounting standards", which violates the market's expectations for fairness and transparency.

2. It will cause "index shock"

The MSCI draft believes that if the digital assets on the company's account account for more than 50% of total assets, it will no longer be regarded as an operating company and will be removed from the index. Strategy pointed out that this rule looks simple on the surface, but in fact it contains the risk of "index shock". Bitcoin prices are already volatile. A company may be excluded this season due to a jump in price, and may be included again in the next quarter due to a drop in price. This will force passive funds to repeatedly buy and sell in a short period of time, causing "chaos and confusion" and seriously damaging the stability of the index and investor confidence.

3. Serious conflict with U.S. national policies

MicroStrategy bluntly stated that the series of digital asset policies launched by the Trump administration, including the establishment of strategic Bitcoin reserves, relaxing 401(k) pension investment in Bitcoin, and requiring "technology neutrality" to treat encryption companies, etc., all demonstrate the stance of supporting digital finance. If MSCI insists on doing this, it will be tantamount to "acting against policy", which is tantamount to "stifling innovation" and goes against the national policy of the United States.

4. The nature of the company is not a fund, but an operating enterprise

MicroStrategy reiterates that it has a software industry with an annual revenue of approximately US$500 million, and actively issues financial products such as Bitcoin guaranteed bonds. It is a "structured financial enterprise supported by Bitcoin" and is not a passive tool that simply holds Bitcoin.

Following developments

MSCI expects to make a final decision no later than January 15, 2026, and will officially implement it when the index adjusts in February. This letter of protest continues the public statement of Michael Saylor, the founder of MicroStrategy, in November this year. He emphasized at the time: "We are not a fund, and index classification does not define the essence of MicroStrategy."

For investors, the next month is not just a wait and see show, but also an important moment to witness whether the traditional index mechanism can accommodate the crypto economy. If MSCI maintains the current draft, Wall Street is bound to see a large-scale rebalancing of passive funds; if it takes a step back to design alternative indexes, it may open a wider mainstream stage for crypto assets.