Saylor Says MSCI Proposal Misguided, Strategy an Operating Co., Not Fund

In its Wednesday response to global index provider MSCI, Strategy (NASDAQ: MSTR) co-founder Michael Saylor urged MSCI to reject its proposal and requested an extended consultation period, at least.

The Bitcoin (BTC) treasury company called for support for its case. The official website containing the response to MSCI also contained a link titled ‘Register your support for Strategy’, which leads users to the following page.

Strategy (formerly MicroStrategy) is the world’s first and largest Bitcoin treasury company. The MSCI proposal is quite literally the biggest challenge Strategy has faced hitherto. Upon announcement, the proposal allegedly flipped the entire crypto market’s sentiment.

BTC price remains over 20% below the all-time high posted on October 6th. Bitcoin went as low as $80,000 before recovering. BTC ETF outflows for November totaled over $3.4 billion, erasing all the inflows from October.

If MSCI excludes Strategy from its indices on January 15th, which some key opinion leaders (KOLs) claim is a certainty, the crypto market could turn more bearish. Exclusion from MSCI indices could trigger automatic exclusion from those funds that are algorithmically linked to the MSCI indices. According to J.P. Morgan, close to $9 billion in outflows will be triggered by the strategy’s exclusion.

Strategy Explains Why MSCI Should Not Exclude DATs From Its Indices

The letter, signed by Saylor and CEO Phong Le, stated that MSCI mischaracterized digital asset treasuries (DATs), such as Strategy’s business model.

“Strategy is not an investment fund, and it does not passively hold Bitcoin. Strategy is an operating business that actively utilizes the Bitcoin it holds to generate returns for its shareholders. Today, Strategy provides novel Bitcoin-backed digital credit instruments analogous to those historically offered by banks and insurance companies.”

“And Strategy, unlike an investment fund, retains the operational flexibility to adapt its value-creation strategies as the revolutionary technology underlying Bitcoin evolves. That operational flexibility is what Strategy’s investors value and is what distinguishes Strategy (and other DATs) from digital asset investment funds.”

“That Strategy and other DATs invest in a single asset class make them no different from REITs or oil companies. MSCI does not classify those businesses as investment funds, and DATs should be treated no differently.”

Strategy further argued that the MSCI was supposed to be a neutral party, and if the proposal were accepted, it would contradict the institution’s claimed role. They said that the proposal isolated an asset class and could create confusion for investors. The eligibility criteria described in the proposal did not have a ‘sound basis’.

Strategy: Our Model is Comparable to Banks, Issuance Companies

Saylor and Lee wrote that Strategy’s core value lay in how it used its Bitcoin. Presently, Strategy holds over 600,000 BTC. They noted that they offered their investors ‘”digital credit” instruments—including preferred stock instruments with fixed and variable dividend rates, varying seniorities and credit protections, and more’.

The proceeds from stock issuance would be used to buy BTC, and as long as the value of their BTC holdings exceeded their dollar-denominated financing costs, their investors would ‘benefit’.

Saylor pointed out that the industry (crypto and the wider web3 industry) was evolving and that Strategy was monitoring business opportunities. They noted that their model was comparable to centuries-old businesses like banks and issuance companies.

Strategy is not required to register under the Investment Company Act of 1940 since BTC is a commodity and not a security. Moreover, it is also not required to register as a ‘commodity pool under the Commodity Exchange Act’.

MSCI Did Not Explain Elaborately, Strategy Alleges

Strategy has faced brick bats ever since the MSCI proposal was ‘discovered’. Interestingly, the proposal did not seem to surface in mainstream publications immediately. Saylor rightly pointed out that MSCI’s proposal was not elaborate and did not name any company.

MSTR did not react sharply to the response; it was trading at $185, down 0.5% over the hour. One of Strategy’s main concerns was that MSCI did not state the characteristics of DATs that were similar to investment funds.

Strategy has made its stance clear it believes MSCI’s characterization of DATs is misguided and could stifle innovation. They also made it clear that they were confident that Bitcoin represented the new era of financial technology and that MSCI would be short-sighted if it went ahead with its proposal.

Now the ball is in the index provider’s court. The consultation period is scheduled to end on December 31st, and the final decision will be announced on January 15th, 2026. The announcement will have far-reaching consequences for Strategy and the crypto market.