Nasdaq-listed Strive, the 14th-largest publicly-listed Bitcoin treasury firm, has formally requested that MSCI re-evaluate its proposal to exclude major Bitcoin holding companies from its widely followed indexes. In a detailed letter addressed to MSCI’s chairman and CEO, Henry Fernandez, Strive articulated that such an exclusion would significantly limit passive investors' exposure to crucial growth sectors and would fail to accurately represent companies poised for expansion.
The potential exclusion from MSCI indexes represents a substantial risk for digital asset treasury firms. Analysts from JPMorgan had previously cautioned that Strategy, a Bitcoin treasury firm currently included in the MSCI World Index, could face a significant financial impact, potentially losing $2.8 billion if MSCI proceeds with the proposed changes. Michael Saylor, the chair of Strategy, has confirmed that the company is actively engaged in discussions with MSCI regarding this matter.
Major Bitcoin Holders at the Forefront of AI Infrastructure Development
Strive CEO Matt Cole highlighted that prominent Bitcoin miners, including MARA Holdings, Riot Platforms, and Hut 8—all of which could be affected by the proposed exclusion—are actively diversifying their operations. These companies are increasingly leveraging their data centers to provide essential power and infrastructure for the burgeoning field of artificial intelligence (AI) computing.
Cole emphasized that many industry observers believe the rapid advancement of AI is primarily constrained by access to power, rather than semiconductor availability. He stated that Bitcoin miners are uniquely positioned to address this growing demand for energy. Cole further explained that even as these companies generate revenue from AI services, their substantial Bitcoin holdings would remain, and their exclusion from indexes would consequently restrict client participation in what is rapidly becoming the most dynamic sector of the global economy.
Growth in Bitcoin Structured Finance Offerings
Cole also pointed out that the proposed exclusion would impede companies like Strategy and Metaplanet, which offer investors products similar to structured notes linked to Bitcoin's performance. These offerings are comparable to those provided by traditional financial institutions such as JP Morgan, Morgan Stanley, and Goldman Sachs.
He elaborated that for Strive and other Bitcoin companies, structured finance is a core business vertical, with stated intentions to focus on this area. Cole argued that it would be an unfair disadvantage for these companies to compete against traditional financiers, especially when burdened by higher capital costs imposed by passive index providers due to their Bitcoin holdings, which are the very assets enabling these innovative financial products.
Challenges with a 50% Bitcoin Threshold
Cole expressed concerns that the proposed 50% threshold for Bitcoin holdings is impractical and unworkable in practice. He explained that linking index inclusion to the performance of a volatile asset like Bitcoin would cause companies to fluctuate in and out of the index frequently. This constant flux would lead to increased management costs and tracking errors for investors.
Furthermore, accurately measuring when a company's digital asset holdings reach the 50% mark presents a significant challenge, particularly as firms gain exposure to digital assets through a variety of complex financial instruments and derivatives.
Cole provided a specific example, noting that Trump Media & Technology Group Corp., which holds the tenth-largest public Bitcoin treasury, was not included on MSCI's preliminary exclusion list. This was because its direct spot holdings constituted just under 50% of its total assets. He clarified that Trump Media's position on the list was not solely due to its Bitcoin holdings but also because it represents a large treasury actively seeking substantial digital asset exposure through derivatives and ETFs.
In lieu of a blanket exclusion, Strive has proposed that MSCI consider developing an alternative version of its existing indexes. This version would be specifically designed as an "ex-digital asset treasury" benchmark. Strive suggested that asset owners seeking to avoid exposure to these companies could opt for these specialized benchmarks, while others could continue to utilize the standard indices that more accurately reflect the complete investable equity universe.