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Strategy CEO Phong Le has strongly criticized MSCI's proposal to exclude companies with a significant portion of their balance sheets in cryptocurrency, likening it to penalizing established corporations for holding their core assets. Le argues that such a move would stifle innovation in a nascent but growing asset class.
Key Takeaways
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Strategy CEO Phong Le argues MSCI's proposed exclusion of crypto-heavy companies is misguided.
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He compares the potential exclusion to penalizing companies like Chevron for holding oil.
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Le asserts that Strategy is an operating company, not an investment fund.
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MSCI's consultation on the proposal is ongoing, with changes expected in early 2025.
A Misguided Stance
MSCI, a prominent stock market index provider, announced in October that it was considering excluding companies whose balance sheets are more than 50% comprised of digital assets. Phong Le, CEO of Strategy, voiced his strong disagreement with this potential policy during an interview with Schwab Network. He believes MSCI's stance is "misinformed and misguided."
Le drew parallels between the proposed exclusion of crypto-holding companies and the established practices of other major industries. He pointed out that energy giant Chevron holds a majority of its assets in oil, timberland company Weyerhaeuser has significant assets in wood, and real estate firm Simon Property Group holds substantial assets in property. None of these companies face exclusion from indexes for holding their primary assets.
Stifling Innovation
Le emphasized that it is premature to "pick winners and choosers" and hinder the development of the digital asset space. He further elaborated on this point by drawing historical analogies. He suggested that excluding crypto companies today would be akin to discouraging investment in cell towers and spectrum in the 1980s or preventing AI companies from investing in large language models and high-performance computing just a few years ago.
Mischaracterization of Operating Companies
Beyond the asset exclusion, Le also addressed MSCI's potential mischaracterization of companies like Strategy as investment funds rather than operating companies. MSCI has noted that some digital asset treasury companies (DATs) exhibit characteristics similar to investment funds, which are typically not eligible for index inclusion. Le countered this by stating that Strategy has been a public, operating company since 1998, with himself serving as CFO since 2015, and that its corporate structure is that of a legitimate operating business.
A Call for Neutrality
Strategy has formally submitted a letter to MSCI, arguing that the proposal is not neutral and biases the index provider against crypto as an asset class. The MSCI's consultation period for this proposal is set to conclude on December 31, with a final decision expected by January 15 of the following year. Any implemented changes would take effect in February.
Sources
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MSCI’s Bitcoin snub is like penalizing Chevron for oil: Strategy CEO, mx.advfn.com.
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MSCI’s Bitcoin snub is like penalizing Chevron for oil: Strategy CEO — TradingView News, TradingView.
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