MSCI’s proposed Bitcoin exclusion would bar companies with over 50% digital asset holdings from indexes, potentially costing firms like Strategy $2.8 billion in inflows. Strive CEO Matt Cole urges MSCI to let the market decide, emphasizing Bitcoin holders’ roles in AI infrastructure and structured finance growth.
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Strive’s letter to MSCI argues exclusion limits passive investors’ access to high-growth sectors like AI and digital finance.
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Nasdaq-listed Strive, the 14th-largest Bitcoin treasury firm, highlights how miners are diversifying into AI power infrastructure.
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The 50% threshold is unworkable due to Bitcoin’s volatility, causing index flickering and higher costs; JPMorgan analysts estimate significant losses for affected firms.
Discover MSCI Bitcoin exclusion proposal details and Strive’s pushback. Learn impacts on Bitcoin treasury firms and AI diversification. Stay informed on crypto index changes—read now for investment insights.
What is the MSCI Bitcoin Exclusion Proposal?
The MSCI Bitcoin exclusion proposal seeks to exclude companies from its indexes if digital asset holdings exceed 50% of total assets, aiming to reduce exposure to volatile cryptocurrencies in passive investment vehicles. This move targets major Bitcoin treasury holders like Strategy, potentially disrupting billions in investment flows. Strive Enterprises, a key player in the space, has formally opposed it through a letter to MSCI’s leadership.
How Does the MSCI Bitcoin Exclusion Affect Bitcoin Treasury Firms?
The proposal could deliver a substantial setback to Bitcoin treasury firms by limiting their inclusion in widely tracked MSCI indexes, which guide trillions in passive investments globally. According to JPMorgan analysts, Strategy alone might see a $2.8 billion drop in assets under management if excluded from the MSCI World Index, as reported in their recent market analysis. This exclusion would hinder these firms’ ability to attract institutional capital, forcing them to compete at a disadvantage against traditional finance entities.
Strive CEO Matt Cole, in his letter to MSCI Chairman and CEO Henry Fernandez, detailed how such a policy fails to reflect the evolving role of digital assets in corporate treasuries. He noted that firms like Strategy and Metaplanet provide structured exposure to Bitcoin’s returns, akin to products from established banks like JP Morgan and Goldman Sachs. Cole argued that penalizing Bitcoin holders creates an uneven playing field, as these companies face higher capital costs without index inclusion.
Furthermore, the threshold’s reliance on a volatile asset like Bitcoin introduces practical challenges. Companies could oscillate in and out of indexes based on price swings, leading to elevated tracking errors and management expenses for fund managers. Cole pointed to Trump Media & Technology Group Corp., the holder of the tenth-largest public Bitcoin treasury, which evaded the preliminary exclusion list due to its holdings—just under 50%—primarily through derivatives and ETFs rather than spot Bitcoin.
Frequently Asked Questions
What Are the Potential Impacts of MSCI’s Bitcoin Exclusion on Crypto Investments?
MSCI’s Bitcoin exclusion could restrict passive investors from gaining exposure to innovative sectors like AI and structured digital finance through firms holding significant Bitcoin treasuries. This might result in reduced liquidity and higher volatility for affected stocks, with estimates from JPMorgan suggesting up to $2.8 billion in lost inflows for companies like Strategy, ultimately slowing broader crypto market adoption.
Why Are Bitcoin Miners Key Players in the AI Infrastructure Race?
Bitcoin miners such as MARA Holdings, Riot Platforms, and Hut 8 possess extensive data centers and power infrastructure, positioning them perfectly to support the surging demand for AI computing resources. As many experts note, the AI sector’s growth is increasingly constrained by power access rather than chip availability, allowing these firms to diversify revenue streams while retaining their Bitcoin holdings for long-term value.
Key Takeaways
- Market-Driven Inclusion: Strive CEO Matt Cole advocates for MSCI to allow market forces to determine index participation for Bitcoin-holding companies, avoiding arbitrary exclusions that stifle innovation.
- AI and Power Synergies: Major Bitcoin miners are pivoting to AI infrastructure, leveraging their energy expertise to address critical bottlenecks in the global AI boom, as highlighted by industry analysts.
- Practical Challenges: Implementing a 50% digital asset threshold risks operational inefficiencies, including frequent index adjustments and measurement issues with diverse exposure methods like derivatives.
Source: Matt Cole
Conclusion
The MSCI Bitcoin exclusion proposal represents a pivotal moment for digital asset integration into mainstream indexes, with Strive’s advocacy underscoring the interconnected growth of crypto treasuries, AI infrastructure, and structured finance. By proposing an opt-out index variant, Strive offers a balanced path forward that preserves investor choice without broad penalties. As the conversation evolves, stakeholders should monitor engagements from firms like Strategy, led by Michael Saylor, to gauge potential shifts in passive investment strategies toward embracing digital assets fully.
Strive CEO Matt Cole has urged the MSCI to “let the market decide” whether they want to include Bitcoin-holding companies in their passive investments. Nasdaq-listed Strive, the 14th-largest publicly-listed Bitcoin treasury firm, has called on MSCI to rethink its plan to exclude major Bitcoin holders from key indexes. This pushback comes amid concerns that such a move could isolate innovative firms from vital capital sources.
In the detailed letter addressed to MSCI’s chairman and CEO, Henry Fernandez, Strive outlined how the exclusion—targeting entities with digital assets making up more than 50% of total assets—would diminish opportunities for passive investors in dynamic sectors. It would also overlook the true scope of companies MSCI aims to represent, according to Cole’s analysis. This perspective draws on Strive’s own position as a prominent Bitcoin treasury operator, providing firsthand insight into the sector’s trajectory.
The stakes are high: exclusion from MSCI indexes could severely impact digital asset treasury firms’ valuations and funding. JPMorgan analysts previously cautioned that Strategy, a leading Bitcoin treasury firm included in the MSCI World Index, faces potential losses of $2.8 billion in investment inflows should the proposal proceed. Such figures underscore the financial ripple effects across the crypto ecosystem, based on established market modeling.
Strategy’s chair, Michael Saylor, has confirmed ongoing discussions with MSCI to address these concerns, signaling active industry resistance. This engagement reflects broader efforts to influence index methodologies that increasingly intersect with digital finance.
Large Bitcoin holders are at the forefront of AI: Strive CEO. Strive CEO Matt Cole emphasized that prominent Bitcoin miners, including MARA Holdings, Riot Platforms, and Hut 8—all at risk under the exclusion criteria—are aggressively expanding their data centers to supply power and facilities for AI workloads. These transformations position them as essential contributors to the AI revolution.
“Many analysts argue that the AI race is increasingly limited by access to power, not semiconductors. Bitcoin miners are ideally positioned to meet this rising demand,” Cole stated in the letter. This view aligns with reports from energy and tech sectors, where power constraints are identified as primary hurdles to scaling AI operations.
“But even as AI revenue comes in, their Bitcoin will remain, and your exclusion would too, curtailing client participation in the fastest-growing part of the global economy.” Cole’s words highlight a symbiotic relationship between crypto mining infrastructure and emerging tech demands, urging MSCI to recognize this synergy.
Bitcoin structured finance is growing. The proposed exclusion would also sideline companies like Strategy and Metaplanet, which deliver investor access to Bitcoin-linked returns through structures comparable to those offered by traditional institutions such as JP Morgan, Morgan Stanley, and Goldman Sachs. Cole argued that this parity in product offerings merits equal treatment in index inclusion.
“Bitcoin structured finance is as real a business for us as it is for JPMorgan. In fact, we, like other Bitcoin companies, have been open about our intent to make this our core vertical. It would be asymmetric for us to compete against traditional financiers, weighed down by a higher cost of capital from passive index providers’ penalties on the very Bitcoin enabling our offerings.” This statement from Cole illustrates the competitive dynamics at play, drawing on Strive’s strategic focus to demonstrate expertise in the field.
A 50% Bitcoin threshold is unworkable. Cole critiqued the proposal’s feasibility, noting that linking index eligibility to Bitcoin’s price fluctuations would cause companies to intermittently qualify or disqualify, inflating costs and errors for index trackers. This volatility-driven issue is a core concern for portfolio managers relying on stable benchmarks.
Measuring the 50% threshold poses additional complexities, as firms acquire digital asset exposure via spot holdings, derivatives, ETFs, and other instruments. “The question is not theoretical. Trump Media & Technology Group Corp., holder of the tenth-largest public Bitcoin treasury, did not appear on your preliminary exclusion list because its spot holdings comprised just under 50% of total assets,” Cole observed.
“Yet Trump Media is not there simply because it is the first large treasury to seek substantial digital asset exposure through derivatives and ETFs.” Rather than a sweeping ban, Strive recommends developing an “ex-digital asset treasury” variant of existing indexes. This approach would enable risk-averse asset owners to opt for exclusion while allowing others to invest in the complete equity landscape.
“Asset owners that wish to avoid these companies could select those benchmarks, while others could continue to use the standard indices that most closely represent the full investable equity universe.” Such a nuanced solution, proposed by Strive, balances diverse investor preferences and supports the maturation of crypto-integrated finance. As discussions progress, insights from figures like Saylor and analyses from JPMorgan will continue to shape outcomes in this evolving space.
Source: https://en.coinotag.com/strive-ceo-urges-msci-to-reconsider-bitcoin-holding-firms-index-exclusion
