Strategy (MSTR) has written a formal letter in response to MSCI's proposal to exclude companies whose digital asset holdings represent 50% or more of total assets from MSCI Global Investable Market Indexes.

Led by Executive Chairman Michael Saylor, Strategy argued that digital asset treasury companies (DATs), including Strategy itself, are operating businesses that use digital assets as productive capital, not passive vehicles for tracking price movements. Strategy builds bitcoin backed credit instruments, manages an active corporate treasury program and maintains a global enterprise analytics software business. Investors buy the company’s strategy and management, not a static wrapper for bitcoin, the company said.

Already under serious pressure thanks to falling bitcoin prices and a narrowing mNAV (the premium to bitcoin holdings at which investors value a company), Strategy shares tumbled even further two weeks ago as the MSCI proposal came to light. MSTR stands to loss many billions in passive capital flows should it be removed from MSCI indexes.

Turning back to Strategy's arguments, the company also listed five reasons the company is not an investment fund:

1. Strategy is organized as a conventional operating company.

2. The company has no fund or ETP like structure or obligations.

3. MSTR is not an investment company under applicable laws.

4. The company creates no fund like tax treatment for investors

5. It has a long history as an operating software business.

The proposed 50% threshold is described as arbitrary and unworkable, Strategy said. Many companies hold concentrated reserves in oil, real estate, timber or utilities, yet remain eligible for MSCI indices. MSCI is thus singling out only digital asset backed companies.

Strategy further argued that the proposal injects policy views into index construction at a time when federal policy has shifted toward supporting digital asset innovation. Excluding DATs could force large passive outflows, undermine American competitiveness and slow the expansion of new financial technologies.

If MSCI continues to remain inclined to treat DATs differently, Strategy urged the firm to extend the consultation and provide a more detailed basis for any proposed changes.