MSCI Contemplates Excluding Crypto-Heavy Firms
MSCI stated that it is still assessing whether to delist such firms due to apprehensions that their business structures resemble those of investment funds. Companies holding more than half of their assets in cryptocurrencies are heavily reliant on crypto acquisitions, raising questions about their suitability for traditional indexes.
In response to MSCI’s_ proposed plan, uncertainties have emerged within the crypto sector. Investors are increasingly worried that shares of these companies may be offloaded by funds and asset managers, potentially influencing cryptocurrency valuations.
One firm under consideration for exclusion is Strategy Inc., a business intelligence and mobile software company, due to its substantial Bitcoin holdings. This move follows cautionary notes from JPMorgan and other market analysts regarding the company’s eligibility in the index.
Strategy Inc.’s stock is expected to face turbulence if the exclusion is implemented. Phong Le, the company’s CEO, stated he might contemplate selling Bitcoin should the shares drop below the firm’s net asset value.
The MSCI exclusion initiative is not the sole factor contributing to market anxiety. The People’s Bank of China (PBoC) has recently revisited the risks linked to crypto assets, particularly stablecoins, keeping further scrutiny on the sector.
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