MSCI announced "not to remove Treasury companies from the index for now," MSTR and others "escaped a crisis."

```

Global index provider MSCI has announced that it will maintain its current approach to how so-called "cryptocurrency treasury companies" are treated in its indices, meaning that companies like MicroStrategy, which hold Bitcoin as a core asset, are temporarily spared from exclusion.

On Tuesday, MSCI stated in a statement that it will maintain its existing approach in the indices regarding companies whose cryptocurrency holdings exceed 50% of their total assets, meaning treasury companies will not be removed from its indices for the time being.

MSCI pointed out that cryptocurrency treasury companies (DATCOs) have characteristics similar to investment funds, with business activities mainly oriented toward investment rather than operations. As an alternative, MSCI revealed plans to launch broader consultations to explore how non-operating companies should be treated.

Strategy currently holds over $60 billion in Bitcoin, accounting for about 99% of its enterprise value. Boosted by this news, Strategy's share price rose more than 6% in after-hours trading; previously, the stock had fallen nearly 60% over the past year.

Although MSCI has shelved the controversial plan that could have resulted in crypto asset-intensive companies being removed from major benchmark indices, this does not mean the door to regulation is shut. Christopher Harvey, Head of Equities and Portfolio Strategy at CIBC Capital Markets, commented:

They have been left in for now, but MSCI hasn't shut the door.

Previously, JPMorgan analysts had warned that if MSCI proceeded with its removal plan, up to $2.8 billion could flow out of Strategy; if other index providers followed suit, the outflow could be even larger.

Broader Consultation and Challenges in Definition

MSCI explained in the statement that distinguishing whether companies hold non-operating assets (like cryptocurrency) as a core business activity or simply for investment purposes requires further research and consultation with market participants.

Earlier, MSCI had proposed banning companies that purchase cryptocurrency from inclusion in U.S. indices, sparking strong opposition from many companies including MicroStrategy.

As one of the earliest and largest cryptocurrency treasury companies, MicroStrategy sharply criticized the plan as "misleading" and "harmful" in a 12-page letter signed last December by Executive Chairman Michael Saylor.

Saylor argued that the 50% threshold "arbitrarily singles out digital asset companies for unique adverse treatment," noting that companies with similar exposure to oil, timber, or gold have not faced the same scrutiny. He also stated that the proposed restrictions fail to account for price volatility and core considerations in balance sheet accounting.

Another Bitcoin treasury company, Strive, co-founded by Vivek Ramaswamy, also objected to the proposal. Its Chairman and CEO Matt Cole commented on social media platform X on Tuesday, calling the decision a "huge win," despite the previously "slim odds."

From Software Company to Bitcoin Holder

Strategy was originally an ordinary software company until 2020, when Saylor shifted company cash to Bitcoin citing inflation erosion of cash value.

Initially dismissed by most market observers as a curiosity, Strategy quickly became a favorite among speculative investors seeking easy channels to invest in Bitcoin.

This strategic transformation once drove Strategy’s share price to soar, rising over 3500% at its post-transformation peak and outperforming major stock indices.

However, with volatility in the crypto market, most crypto treasury concept stocks have tumbled in the past year, and the market values of many companies have even fallen below the value of the digital tokens they hold.

Although MSCI’s decision has bought Strategy some time, the debate over the position of cryptocurrency treasury companies in traditional financial indices is far from over.

Risk Warning and DisclaimerThe market has risks, and investment should be cautious. This article does not constitute individual investment advice and does not take into account particular users’ specific investment objectives, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article are applicable to their particular situations. Invest accordingly at your own risk. ```