MSCI pauses plan to exclude crypto-heavy firms but opens wider review

MSCI said it will maintain current index treatment for digital asset treasury companies and will launch a broader consultation on how to treat non-operating or investment-oriented entities; the article says Strategy, which holds over $60 billion in Bitcoin, will remain in MSCI indexes and its shares rose about 5% in after-hours trading.

MSCI said it will keep current index treatment for so-called digital asset treasury companies, pausing a proposal that could have removed crypto-heavy firms from major indexes. The article says this means firms such as Strategy, which holds over $60 billion in Bitcoin and where those holdings represent most of enterprise value, will remain in MSCI's global benchmarks for now. MSCI also said feedback showed investor unease about whether some of these companies resemble investment funds and announced a broader consultation on how to treat non-operating or investment-oriented entities. The announcement follows criticism of the earlier proposal from affected firms and public letters from company executives. Key facts: - The article says MSCI will maintain current index treatment for digital asset treasury companies, including those with crypto holdings above 50% of total assets. - The article says Strategy holds over $60 billion in Bitcoin and that these holdings make up roughly 99% of its enterprise value. - The article says Strategy's shares rose about 5% in after-market trading following the announcement. - The article notes MSCI will launch a broader consultation and further research on how to distinguish investment-oriented or non-operating entities from operating companies. - The article notes feedback to MSCI highlighted investor concerns that some digital asset treasury companies share characteristics with investment funds. - The article notes analysts at JPMorgan warned that substantial outflows could occur from Strategy if index providers moved to exclude such companies. Summary: The decision preserves the current index status of affected companies in the near term and softened the immediate market reaction for those shares. MSCI plans further consultation and research on how to treat non-operating or investment-oriented entities, and it has not closed the door on potential future changes. Undetermined at this time whether the review will lead to specific rule changes.