Strategy Challenges MSCI Over $23.9B MSTR Index Risk

Strategy has challenged MSCI’s proposed non-operating asset screen by citing MSCI’s statements to the SEC in 2022 and arguing the test would require MSCI to determine whether Bitcoin is part of an operating business. The company estimated about $23.931 billion of its float-adjusted market capitalization in MSTR would be affected.

MSCI opened the consultation on Aug. 3. The proposal would apply a core screen plus five financial ratios to identify additional non-operating companies; a company that triggers four flags would be ineligible for MSCI’s Global Investable Market Indexes. Strategy argued that neither GAAP nor IFRS defines operating versus non-operating asset categories and that MSCI would thereby create its own standard for classifying assets.

The dispute refers to a 2022 SEC inquiry on whether information providers, including index providers, could fall under the Investment Advisers Act. In that exchange MSCI told the SEC that index providers do not express views on whether a company, market, strategy or investment is good or bad and make no investment recommendations. Strategy argued the proposed screen conflicts with that neutrality position because classifying assets requires subjective judgment about a company’s business model.

In its latest 10-Q, Strategy reports two operating segments, Software and Bitcoin, with the Bitcoin segment covering treasury operations, acquisitions, capital markets and capital management. It argued applying MSCI’s test would impose MSCI’s own definition of an operating business on a company whose SEC filings present Bitcoin activity as an operating segment.

Strategy cited language in MSCI’s 10-K that adviser-style obligations could raise costs and complexity and attached a financial consequence to its regulatory argument. Using MSCI figures, Strategy said it accounts for roughly 86.9% of the affected float-adjusted market value — about $23.931 billion of a $27.549 billion group of initially impacted companies.

The company asked MSCI to publish more of the consultation record, identify which companies would trigger the proposed screen, explain the reasoning behind classifications, and place a legal hold on documents related to the final eligibility test. No litigation was announced; the preservation request aims to ensure MSCI retains internal records while the consultation is live.

The filing stated: ‘The proposal, like the 2025 proposal that MSCI withdrew, is discriminatory, arbitrary, and misguided.’

MSCI has not issued a formal ruling and the SEC has made no determination about the framework. 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.

If MSCI narrows the screen, defines operating assets more precisely, or phases implementation, Strategy and other companies with large corporate Bitcoin holdings would face reduced near-term deletion risk. If MSCI proceeds unchanged, affected securities may be deleted or placed on watchlists, which would prompt index-linked portfolios to adjust holdings.

Strategy may continue to contest the framework through the consultation or pursue legal or regulatory avenues. MSCI will present any final classification alongside the neutrality position it gave the SEC in 2022 while addressing the technical and market-impact concerns raised by Strategy.