Stock market index MSCI's potential exclusion of companies holding a significant portion of their assets in Bitcoin is drawing criticism, with some industry observers comparing the move to penalizing major energy companies for their oil holdings. The debate centers on MSCI's consideration of excluding companies that hold more than 50% of their assets in crypto from its index.
Strategy CEO Phong Le has publicly argued against MSCI's consultation, stating that such a policy would be akin to excluding multinational energy corporations like Chevron for holding oil reserves. Le's argument highlights the fundamental business of these companies, suggesting that penalizing them for holding the assets intrinsic to their operations is illogical.
The MSCI Index announced in October that it was consulting with stakeholders regarding the treatment of companies with substantial crypto holdings. This announcement has sparked considerable discussion within the investment community, particularly concerning the implications for companies like Strategy, which has made significant investments in Bitcoin.
J.P. Morgan analysts have warned that Strategy is at risk of being excluded from major equity indices as the January MSCI decision approaches. Estimates suggest that if MSCI removes Strategy, passive outflows could reach $2.8 billion. If other index providers follow MSCI's lead, the outflows could surge to $8.8 billion.
Strategy claims its holdings of 649,870 BTC can fund 71 years of dividends. Despite this, the company was rejected by the S\&P 500 and now faces the risk of removal from the MSCI index. Strategy appeared on MSCI's preliminary list of 38 digital-asset-treasury companies flagged for removal.
The debate around MSCI's potential policy change comes at a time of increasing interest in cryptocurrencies and their role in corporate treasury management. While some companies have embraced Bitcoin as a strategic asset, others remain cautious due to its volatility and regulatory uncertainty. The decision by MSCI could set a precedent for how major indices treat companies with significant crypto holdings, potentially influencing investment flows and market sentiment.
Bitcoin's blockchain is a public ledger that records all transactions made with the cryptocurrency. It uses a decentralized network of computers to maintain a series of data blocks secured using cryptography, ensuring the integrity of each transaction.
