Strategy turns MSCI’s own SEC words against its $24 billion MSTR threat

Strategy has challenged MSCI's proposed “non-operating company” screen by tying it to a regulatory argument MSCI made four years ago in a letter shared on Aug. 31.

The Bitcoin treasury company says the new methodology requires MSCI to judge whether Bitcoin belongs inside an operating business. That puts MSCI's 2022 defense to the Securities and Exchange Commission (SEC) at the center of the dispute.

MSCI told the agency that index providers “express no opinion or view as to whether any market, company, strategy or investment is good or bad,” a position Strategy says becomes harder to reconcile with a test that classifies corporate assets as operating or non-operating.

MSCI's latest 10-K says adviser-style obligations could increase the costs and complexity of its operations, giving Strategy a financial consequence to attach to its regulatory argument.

The index provider opened the consultation on Aug. 3 as part of a plan to expand existing exclusions for investment funds and business development companies. The proposal would use a core screen and five financial ratios to identify additional “non-operating companies,” with four triggered flags making a company ineligible for Global Investable Market Indexes.

Strategy argues that GAAP and IFRS provide no definitions for the operating and non-operating asset categories MSCI wants to use.

Under Strategy's reading, MSCI would therefore create its own standard for determining whether Bitcoin belongs inside an operating company, then use that classification to decide which securities qualify for its indexes.

It stated:

“The proposal, like the 2025 proposal that MSCI withdrew, is discriminatory, arbitrary, and misguided. If adopted, the proposal would have no meaningful impact on Strategy’s business, but it would profoundly harm MSCI’s reputation as a reliable and neutral index provider.”

Strategy is using MSCI's SEC defense against the new screen

The SEC opened a request for comment in 2022 examining circumstances that could bring information providers, including index providers, within the Investment Advisers Act. Then-SEC Chair Gary Gensler focused on the economic power of index construction because inclusion and exclusion decisions can cause investors to buy or sell securities.

MSCI answered by presenting index providers as neutral market measurers. Its comment letter said it expresses no view on whether a company, market, strategy, or investment is good or bad and makes no recommendations about investments or asset allocations.

Strategy says the proposed screen conflicts with that position because MSCI would decide whether Bitcoin qualifies as an operating corporate asset.

The Bitcoin treasury's latest 10-Q strengthens its argument by reporting two operating segments, Software and Bitcoin, with the Bitcoin segment covering treasury operations, acquisitions, capital markets, and capital management.

MSCI could still classify the asset base behind that segment differently for index purposes. Strategy argues that doing so would require the index provider to impose its own definition of an operating business on a company whose SEC filings already treat Bitcoin activity as an operating segment.

That distinction gives Strategy a route into the regulatory debate surrounding index providers.

The SEC's 2022 inquiry remains general, and the agency has issued no determination on MSCI's current proposal. Strategy is using an existing regulatory issue to make MSCI defend the degree of discretion embedded in its methodology.

MSCI told shareholders that investment-adviser obligations could raise costs and complexity across its business and could create conflicts with other regulatory duties.

Strategy is pointing MSCI toward a risk the index provider already recognizes in its public disclosures.

Strategy says 87% of the affected value points back to MSTR

Citing MSCI figures, Strategy says its float-adjusted market capitalization totals over $23.9 billion among six companies that would initially face deletion or watchlisting, compared with nearly $3.6 billion for the other five combined.

Strategy accounts for about 86.9% of the affected float-adjusted market value. That concentration gives the company evidence for its claim that an industry-neutral methodology would fall overwhelmingly on the largest Bitcoin treasury company, though the figure alone establishes nothing about MSCI's intent.

The dispute points to a wider issue for corporate Bitcoin models, as MSCI defines how companies built around large digital-asset holdings fit inside broad equity benchmarks.

Strategy has incorporated Bitcoin into its treasury operations, capital markets activity and segment reporting, while MSCI's proposal could classify the assets supporting that business as non-operating for index eligibility.

Strategy's letter also asks MSCI to publish more of the consultation record, identify which companies would trigger the proposed screen, and explain the reasoning behind those classifications.

Near the end, Strategy asks MSCI to place a legal hold on documents connected to the purpose, creation, and issuance of the final eligibility test.

The company has announced no litigation, though the preservation request ensures that MSCI retains the internal record behind a methodology Strategy is attacking on regulatory grounds.

The bull case gives Bitcoin treasury companies a benchmark

Strategy's bull case depends on MSCI softening or withdrawing the current framework before the consultation concludes. MSCI could narrow the screen, define operating assets more precisely, or redesign the methodology so that corporate Bitcoin activity receives clearer treatment.

A softer framework would reduce immediate deletion risk for Strategy and give other Bitcoin treasury companies more room inside broad equity benchmarks. It could also establish an early precedent for companies that present Bitcoin acquisition and capital management as part of their operating structure.

The 86.9% concentration gives MSCI another factor to consider because a general methodology would produce a highly concentrated initial result.

Strategy's SEC argument adds a separate regulatory consideration by forcing MSCI to reconcile the proposed asset classification with the neutrality defense it presented in 2022.

The bear case leaves Strategy exposed to deletion

MSCI can proceed with the current framework and defend asset classification as part of ordinary index construction.

Under that outcome, Strategy could face deletion or watchlist treatment once MSCI applies the screen, which could require index-linked portfolios to adjust their MSTR holdings. The methodology could then become a template for evaluating other Bitcoin treasury companies as digital assets occupy larger portions of corporate balance sheets.

Strategy could continue contesting the framework through the consultation process or pursue a broader legal route, with its document-preservation request keeping MSCI's internal methodology record intact.

MSCI is accepting feedback through Sept. 30 and expects to announce its decision on or before Oct. 16, with implementation proposed for the November 2026 Index Review.

Those dates give Strategy only weeks to persuade MSCI that its Bitcoin screen creates a problem extending beyond MSTR's eligibility.

MSCI will ultimately have to defend the classification framework alongside the regulatory position it previously presented to the SEC. Strategy has made that consistency part of the price of proceeding.

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