As the world of finance evolves, MSCI is contemplating a significant rule change that could shake up the Global Investable Market Indexes. This proposal targets companies with over 50% of their assets in digital currencies like Bitcoin. The surface simplicity of this idea belies its profound implications. It stands to affect well-known entities such as Michael Saylor's Strategy (previously MicroStrategy), Eric and Donald Trump Jr's American Bitcoin Corp (ABTC), and numerous others worldwide. These companies operate legitimately, under strict regulations, and in alignment with traditional treasury norms.
The Heart of MSCI's Proposal
Under the proposal, companies heavily invested in digital assets could face exclusion from MSCI's primary equity indices if their holdings surpass the 50% mark. This change is slated for implementation by February 2026. The scope of this proposition is broad:
- Strategy (formerly MicroStrategy), a notable player in software and business intelligence utilizing Bitcoin as a treasury asset.
- American Bitcoin Corp (ABTC), a fresh public entity established by Eric and Donald Trump, focusing on Bitcoin in its balance sheet strategy.
- Various miners, infrastructure firms, and diversified businesses employing Bitcoin as a long-term hedge against inflation or as a capital reserve.
These firms are all publicly traded, with solid financial records, genuine products, a loyal customer base, and robust governance. They are not mere "Bitcoin ETFs" but distinguished by their treasury approach involving a globally traded, liquid asset.
JPMorgan's Alarm Versus Reality Check
JPMorgan analysts sounded the alarm about Strategy potentially facing sizable passive outflows if MSCI proceeds with its exclusion, hinting at billions in potential repercussions. While their concerns about passive flows are valid, the actual impact is less dramatic. Strategy has dealt with over $1 trillion in volume this year alone. The projected $2.8B outflow scenario is a drop in the ocean, representing minuscule fractions of regular trading activity.
- It's less than an average trading day.
- Merely ~12% of a typical week.
- Just ~3% of a standard month.
- Merely 0.26% of this year's trading volume.
This is a negligible liquidity issue. The primary concern lies in the precedent of excluding companies based on their treasury assets, shifting the selection criteria from financial to political grounds.
A Contradiction on MSCI's Own Balance Sheet
Interestingly, MSCI's stance clashes with its asset composition. While MSCI reports roughly $5.3B in total assets, over 70% (around $3.7B) comprises intangible assets and goodwill. These entries are illiquid and non-marketable, unlike digital assets like Bitcoin:
- Bitcoin trades globally round the clock.
- It boasts transparent price discovery.
- It's fully auditable and mark-to-market.
- It's more liquid than most corporate treasury assets except sovereign cash.
Penalizing firms for holding a more liquid, transparent, and objectively valued asset like Bitcoin, in contrast to the intangibles dominating MSCI's balance sheet, seems counterintuitive.
How the Proposal Contravenes Benchmark Standards
MSCI serves as a global benchmark authority, relied upon for trillions in capital allocation. Their indices adhere to fundamental principles of neutrality, representativeness, and stability, all of which the proposed digital-asset threshold infringes upon.
Neutrality
Benchmarks should steer clear of arbitrary biases against legitimate business strategies. Exclusion is not a norm for companies holding substantial cash, gold, foreign exchange, commodities, real estate, or receivables exceeding half their assets. Digital assets are unfairly singled out despite being legal, regulated, and widely embraced by institutions.
Representativeness
Indices should mirror investable markets rather than curate them. Corporate Bitcoin treasury strategies are gaining traction across firms of all sizes as a means of preserving capital long-term. Omitting these entities compromises the accuracy and completeness of MSCI's indices, distorting investors' perception of the corporate landscape.
Stability
The 50% threshold sets up a binary cliff effect, with Bitcoin's usual 10–20% price swings. Companies could frequently slip in and out of index eligibility due to price fluctuations, resulting in unnecessary turnover, increased tracking errors, and higher fund implementation costs. Such rules are usually avoided by index providers to prevent volatility amplification, which this proposal would introduce.
The Impending Market Ramifications of Exclusion
Forced Selling
If MSCI proceeds, passive index funds will need to divest holdings in affected firms. However, the actual impact is minor because:
- Strategy and ABTC boast high liquidity.
- Flows represent a small fraction of standard trading volumes.
- Active managers can continue holding or increasing their exposure.
Access to Capital
Despite warnings of exclusion signaling risk, markets adapt swiftly. As long as a company remains liquid, transparent, capable of raising capital, and effectively communicates its treasury policy, it stays investable. Index exclusion poses an inconvenience rather than a structural hindrance.
Precedent Risk
Adopting asset-based exclusion rules sets a dangerous precedent of eliminating firms based on their treasury choices rather than their core business fundamentals. This trend could politicize global benchmarks, a perilous path to tread.
The Global Competitiveness Conundrum
Bitcoin treasury strategies are gaining ground worldwide, from Japan to Latin America, Europe to North America. Disproportionate exclusion of these companies by MSCI puts U.S. and Western firms at a competitive disadvantage against regions embracing digital assets. Indices should reflect markets, not pick national champions or losers.
MSCI's Past Insights on Exclusion's Distorting Effects
MSCI's handling of Metaplanet's IPO highlights its awareness of the risks of "reverse turnover." By refraining from immediate implementation, MSCI avoided index instability during the offering. This underscores the broader truth that rigid rules can destabilize indices, with a digital-asset threshold magnifying this fragility on a larger scale.
Exploring Better Alternatives
Enhanced Disclosure
Mandating standardized reporting of digital-asset holdings in public filings can offer investors clarity without altering index composition.
Classification or Sub-Sector Label
Introducing a category like "Digital Asset Treasury–Integrated" can help investors distinguish between various business models.
Liquidity or Governance Screens
If liquidity, governance, or volatility are concerns, MSCI should employ criteria it universally applies across sectors, without necessitating exclusion.
Why the Proposal Merits Reconsideration
The proposal doesn't resolve actual issues but births several:
- Diminished global index representativeness.
- Neutrality violation by targeting a specific treasury asset.
- Introducing instability tied to an asset with typical volatility.
- Unnecessary turnover for passive funds.
- Impaired global competitiveness.
- Setting the stage for politicized index construction.
Bitcoin is a legitimate asset. Companies shouldn't be penalized for sound treasury decisions or choosing a long-term asset like Bitcoin, which is more liquid, transparent, and objectively priced than most corporate intangibles. Indices should reflect markets as they exist, not as gatekeepers wish them to be.
MSCI should retract the proposal and uphold the neutrality that has earned its benchmarks trust among global capital markets.
Frequently Asked Questions
How does a gold IRA work?
The Gold Ira Accounts are tax-free investment options for those who want to make investments in precious metals.
You can purchase physical bullion gold coins at any point in time. You don't have a retirement date to invest in gold.
The beauty of owning gold as an IRA is you can hold on to it forever. When you die, your gold assets won't be subjected to taxes.
Your heirs can inherit your gold and avoid capital gains taxes. It is not required that you include your gold in the final estate report because it remains outside your estate.
To open a gold IRA, you will first need to create an individual retirement account (IRA). After you have done this, an IRA custodian will be assigned to you. This company acts as an intermediary between you and IRS.
Your gold IRA Custodian will manage the paperwork and submit all necessary forms to IRS. This includes filing annual reporting.
Once you've established your gold IRA, you'll be able to purchase gold bullion coins. The minimum deposit required for gold bullion coins purchase is $1,000 A higher interest rate will be offered if you invest more.
Taxes will apply to gold that you take out of an IRA. You will be liable for income taxes and penalties if you take the entire amount.
A small percentage may mean that you don't have to pay taxes. However, there are exceptions. If you take out 30% of your total IRA assets or more, you will owe federal income taxes and a 20 percent penalty.
You shouldn't take out more then 50% of your total IRA assets annually. You'll be facing severe financial consequences if you do.
Should You Purchase Gold?
Gold was considered a safety net for investors during times of economic turmoil in the past. Many people are shifting away from traditional investments like bonds or stocks to instead look toward precious metals such gold.
Gold prices have been on an upward trend over recent years, but they remain relatively low compared to other commodities such as oil and silver.
This could be changing, according to some experts. They say that gold prices could rise dramatically with another global financial crisis.
They also pointed out that gold is gaining popularity due to its perceived value, and potential return.
These are some things you should consider when considering gold investing.
- The first thing to do is assess whether you actually need the money you're putting aside for retirement. You can save for retirement and not invest your savings in gold. The added protection that gold provides when you retire is a good option.
- Second, make sure you understand what you're getting yourself into before you start buying gold.There are several different types of gold IRA accounts available. Each type offers varying levels and levels of security.
- Finally, remember that gold doesn't offer the same level of safety as a bank account. Losing your gold coins could result in you never being able to retrieve them.
Don't buy gold unless you have done your research. Protect your gold if you already have it.
Is gold buying a good retirement option?
Although buying gold as an investment might not sound appealing at first, when you look at the average annual gold consumption worldwide, it is worth looking into.
The best form of investing is physical bullion, which is the most widely used. You can also invest in gold in other ways. Research all options carefully and make an informed decision about what you desire from your investments.
For example, purchasing shares of companies that extract gold or mining equipment might be a better option if you aren't looking for a safe place to store your wealth. If you are looking for cash flow from your investment, buying gold stocks will work well.
You can also put your money in exchange traded funds (ETFs). These funds allow you to be exposed to the price and value of gold by holding gold related securities. These ETFs may include stocks that are owned by gold miners or precious metals refining companies as well as commodity trading firms.
How much money should my Roth IRA be funded?
Roth IRAs let you save tax on retirement by allowing you to deposit your own money. You cannot withdraw funds from these accounts until you reach 59 1/2. There are some rules that you need to keep in mind if you want to withdraw funds from these accounts before you reach 59 1/2. You cannot touch your principal (the amount you originally deposited). No matter how much money you contribute, you cannot take out more than was originally deposited to the account. If you are able to take out more that what you have initially contributed, you must pay taxes.
The second rule states that income taxes must be paid before you can withdraw earnings. You will pay income taxes when you withdraw your earnings. Let's suppose that you contribute $5,000 annually to your Roth IRA. Let's also assume that you make $10,000 per year from your Roth IRA contributions. On the earnings, you would be responsible for $3,500 federal income taxes. You would have $6,500 less. This is the maximum amount you can withdraw because you are limited to what you initially contributed.
The $4,000 you take out of your earnings would be subject to taxes. You'd still owe $1,500 in taxes. You would also lose half of your earnings because they are subject to another 50% tax (half off 40%). So even though you received $7,000 in Roth IRA contributions, you only received $4,000.
There are two types: Roth IRAs that are traditional and Roth. A traditional IRA allows you to deduct pre-tax contributions from your taxable income. Your traditional IRA allows you to withdraw your entire contribution plus any interest. You have the option to withdraw any amount from a traditional IRA.
Roth IRAs do not allow you to deduct your contributions. But once you've retired, you can withdraw the entire contribution amount plus any accrued interest. Unlike a traditional IRA, there is no minimum withdrawal requirement. You don't have to wait until you turn 70 1/2 years old before withdrawing your contribution.
What are some of the benefits of a gold IRA
It is best to put your retirement money in an Individual Retirement Account (IRA). It's not subject to tax until you withdraw it. You have total control over how much each year you take out. And there are many different types of IRAs. Some are better suited for college students. Some are for investors who seek higher returns. Roth IRAs, for example, allow people to contribute after they turn 59 1/2. They also pay taxes on any earnings when they retire. These earnings don't get taxed if they withdraw funds. This type of account might be a good choice if your goal is to retire early.
An IRA with a gold status is like any other IRA because you can put money into different asset classes. Unlike a regular IRA you don't need to worry about taxes while you wait for your gains to be available. This makes gold IRA accounts excellent options for people who prefer to keep their money invested instead of spending it.
Another advantage to owning gold via an IRA is the ease of automatic withdraws. That means you won't have to think about making deposits every month. To ensure that you never miss a payment, you could set up direct debits.
Finally, gold is one the most secure investment options available. Because it isn’t tied to any specific country, gold’s value tends to stay stable. Even during economic turmoil, gold prices tend to stay relatively stable. Therefore, gold is often considered a good investment to protect your savings against inflation.
Can I buy gold using my self-directed IRA
You can purchase gold with your self-directed IRA, but you must first open an account at a brokerage firm like TD Ameritrade. Transfer funds from an existing retirement account are also possible.
The IRS allows individuals contributing up to $5.500 each ($6,500 if married, filing jointly) into a traditional IRA. Individuals may contribute up to $1,000 ($2,000 if married, filing jointly) directly into a Roth IRA.
If you do decide you want to invest your money in gold, you should look into purchasing physical bullion instead of futures contracts. Futures contracts can be described as financial instruments that are determined by the gold price. You can speculate on future prices, but not own the metal. But, physical bullion is real bars of gold or silver that you can hold in one's hand.
Statistics
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
External Links
forbes.com
- Gold IRA, Add Sparkle to Your Retirement Nest egg
- Understanding China's Evergrande Crisis – Forbes Advisor
law.cornell.edu
- 7 U.S. Code SS 7 – Designation of boards of trade as contract markets
- 26 U.S. Code SS 408 – Individual retirement account
cftc.gov
investopedia.com
How To
The best way to buy gold (or silver) online
Understanding how gold works is essential before you buy it. It is a precious metal that is very similar to platinum. It's very rare and is used as money because of its durability and resistance to corrosion. It is very difficult to use and most people prefer to purchase jewelry made of it over actual bars of Gold.
There are two types currently available: legal tender and bullion. Legal tender coins are minted for circulation in a country and usually include denominations like $1, $5, $10, etc.
Bullion coin are not intended for investment. However, their value will increase with inflation.
They can't be exchanged in currency exchange systems. For example, if a person buys $100 worth of gold, he/she gets 100 grams of gold with a value of $100. Every dollar spent on gold purchases, the buyer receives one gram of gold.
Next, you need to find out where to buy gold. There are several options available if your goal is to purchase gold from a dealer. First, your local currency shop is a good place to start. You might also consider going through a reputable online seller like eBay. You may also be interested in buying gold through private sellers online.
Individuals selling gold at wholesale prices and retail prices are known as private sellers. Private sellers typically charge 10% to 15% commission on each transaction. Private sellers will typically get you less than a coin shop, eBay or other online retailers. This option is often a great choice for investing gold as it allows you more control over its price.
The other option is to purchase physical gold. Physical gold is much easier to store than paper certificates, but you still have to worry about storing it safely. To ensure that your physical gold remains safe, you need to secure it in an impenetrable container such as a vault or safety deposit box.
A bank or pawnshop can help you buy gold. A bank can provide you with a loan to cover the amount you wish to invest in gold. Small establishments that allow customers to borrow money for items they have brought are called pawnshops. Banks charge higher interest rates than those offered by pawn shops.
Another way to purchase gold is to ask another person to do it. Selling gold is simple too. You can contact a company like GoldMoney.com to set up an account and receive payments right away.
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By: Nick Ward
Title: MSCI's Controversial Move: Impact on Bitcoin Treasury Companies and Benchmark Neutrality
Sourced From: bitcoinmagazine.com/bitcoin-for-corporations/msci-singles-out-bitcoin-treasury-undercuts-benchmark-neutrality
Published Date: Tue, 25 Nov 2025 16:41:38 +0000
