MSCI REWROTE ITS CRYPTO RULE TO BE ASSET-NEUTRAL — IT STILL CATCHES THE SAME THREE COMPANIES — STRATEGY SAYS IT ISN’T MATERIAL AND WROTE A LETTER ANYWAY

In January, MSCI proposed excluding companies whose digital assets were half or more of total assets. That was a crypto rule and it said so. The industry pushed back, MSCI withdrew it, and in August it came back asset-neutral, with no mention of bitcoin anywhere. Now a company whose operating assets fall under half of total assets faces five tests — how much of the balance sheet actually operates, how much it spends operating, whether operating cash flow is positive, how much the value swings, how dependent it is on raising capital. Fail four of the five and you are out. Strategy and Metaplanet fail all five. The third company caught is a uranium fund. That is the whole story. Told the crypto-specific version was discriminatory, MSCI wrote a version that never says crypto and lands on the same companies. The neutrality is in the wording. Feedback closes September 30, MSCI decides by October 16, and anything that follows happens at the November index review. Estimates of forced passive selling in Strategy alone run around $1.8 to $2 billion, and JPMorgan put another $8.8 billion on the table last November if other index providers copy the rule. Strategy says the proposal is not material to MSTR, then filed a formal letter and asked the public to back it. Both can be true at once. It is not material to the company that already got in. It is entirely material to whoever comes next.