“They’re staying for now,” said Christopher Harvey, the head of equity and portfolio strategy at CIBC Capital Markets. “However, MSCI did not close the door.”
Shares of Strategy rose around 5% in after-market trading on Tuesday. The stock had slumped almost 60% in the past year. A representative of Strategy didn’t immediately respond to a request for comment.
In a statement, MSCI said feedback from its consultation highlighted investor unease that some digital asset treasury companies — or DATCOs — share characteristics with investment funds.
See also: The coming crypto apocalypse
“Distinguishing between investment companies and other companies that hold non-operating assets, such as digital assets, as part of their core operations rather than for investment purposes requires further research and consultation with market participants,” the statement said. “Feedback also highlighted that DATCOs may represent a subset of a wider group of entities whose business activities are predominantly investment-oriented rather than operational.”
The widely anticipated decision follows criticism from several firms that slammed MSCI’s proposal to bar crypto-buying companies from US indices. Strategy, the original and largest of the so-called DATCOs, described the plan as “misguided” and “harmful” in a 12-page letter signed by Saylor in December.
Saylor, the executive chairman of the largest bitcoin accumulator, argued that the 50% threshold “arbitrarily singles out digital asset businesses for uniquely unfavourable treatment”, noting that companies with comparable exposures to oil, timber, or gold are not subject to similar scrutiny. He also said the proposed limit fails to account for price volatility and other considerations central to balance-sheet accounting.
See also: Bitcoin plunges to near US$60,000 before paring losses in Asia
The company was a modest enterprise software firm until 2020, when Saylor surprised Wall Street by shifting his corporate cash into bitcoin, citing the corrosive effects of inflation. After initially being viewed as curiosity by most market observers, the former MicroStrategy became a favourite of speculative investors seeking an easy way to access bitcoin while the original cryptocurrency soared in value. The shares soon become a market phenomenon, soaring more than 3,500% at their peak following the pivot in strategy and outperforming all equity indices.
Strive, another bitcoin treasury company co-founded by former US presidential candidate Vivek Ramaswamy, made similar arguments in its own public letter. Chairman and chief executive officer Matt Cole on social media platform X called on Tuesday the decision a “huge win” even “with the odds stacked against us”.
In a recent note, analysts at JPMorgan Chase & Co warned that as much as US$2.8 billion could exit Strategy if MSCI moves ahead with the expulsion — and billions more if other index providers follow suit.
At one point last year, digital asset treasuries were one of the hottest trends in the public markets, as share prices skyrocketed and everyone from Peter Thiel to the Trump family piled in. But most have now fallen sharply, leaving many of the companies worth less than the digital tokens they own.
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