1
CASE STUDY: Bitcoin as an Emerging Corporate Treasury Asset -Micro Strategy
Incorporated (MSTR)
Learning objective #1
When it comes to board leadership, corporations need to separate the roles of chairman
and CEO to limit the power of the CEO. The separation of the Chairman and Chief Executive
Officer (CEO) roles is an important consideration for any organization. This decision is
particularly important for MicroStrategy, a publicly traded company, as there is a large group of
stakeholders, ranging from employees to bond holders and equity holders, who must be taken
into account when making decisions regarding the company's corporate governance. In the case
of MicroStrategy, Michael Saylor has held both the CEO and Chairman roles since his founding
of the company in 1989. In August 2022, Saylor relinquished the position of CEO while
remaining Executive Chairman of the company. This decision was likely due to the company’s
announcement of more than $1 billion in digital asset impairments. As a MicroStrategy
stakeholder, I believe this decision was a step in the right direction for the company.
From the perspective of a MicroStrategy stakeholder, separating the Chairman and CEO
roles is an important step in ensuring that the company is properly managed and that the interests
of all stakeholders are balanced. By separating the Chairman and CEO roles, the CEO has less
control over the company's direction and is more accountable for their decisions. This helps to
protect the interests of all stakeholders, as it prevents the CEO from making decisions that might
benefit them but not the overall company. Having the same person in both roles of Chairman and
CEO can lead to a conflict of interest. The CEO may not be making decisions in the best interest
of the shareholders but rather using the company as a way to further their own agenda. This is
especially true for publicly traded companies, as the CEO is not the company's sole owner but
rather accountable to shareholders. By having a separate person in the role of Chairman, there is
more accountability and oversight of the CEO’s decisions. In the case of MicroStrategy, Saylor
is still the Executive Chairman, which means that he still has great power in the company.
However, by relinquishing the CEO role, Saylor has opened up the company to a more diverse
board of directors. This could be beneficial for the company in the long run, as it gives them the
ability to bring in a different perspective and fresh ideas. Additionally, separating the Chairman
and CEO roles can help create a more diverse and balanced board of directors. Having a
Chairman and CEO who are not the same person prevents any one individual from having too
much control over the board. This helps to ensure that all stakeholders have a voice in the
company's direction and can help foster a more collaborative and productive environment.
Finally, having the Chairman and CEO roles separated can help to ensure that the
company is properly managed and that it is being run in the best interests of all stakeholders.
Having a Chairman and CEO who are not the same person helps to ensure that all decisions are
made in the company's best interests and that the CEO is held accountable for their decisions.
This helps to ensure that all stakeholders, from employees to bondholders and equity holders, are
properly taken into account when making decisions about the company's direction. Given all of
these considerations, it is clear why separating the Chairman and CEO roles is an important step
for MicroStrategy. This decision helps to ensure that the company is properly managed and that
all stakeholders are taken into account when making decisions about the company's direction.
Thus, from the perspective of a MicroStrategy stakeholder, the separation of the Chairman and
, 2
CEO roles is an important consideration and should be taken into account when making
decisions about the company's corporate governance.
Learning objective #2
The probability of the Securities and Exchange Commission charging MicroStrategy with
operating as a cloaked Bitcoin Exchange Traded Fund (ETF) is low. MicroStrategy is currently
classified as a publicly traded software company, not a financial institution, and is not registered
with the SEC as a broker/dealer or investment adviser. As such, they are not subject to the same
regulations as a traditional ETF. Although the SEC has been known to crack down on companies
that violate securities laws, MicroStrategy has been very clear that its primary purpose in buying
Bitcoin is to hold it as a long-term store of value, not to speculate on its price. Additionally,
MicroStrategy has taken steps to ensure that their Bitcoin holdings do not constitute an ETF,
such as limiting their purchases to only 0.5% of the daily volume of the Bitcoin futures contract.
If the SEC were to level such a charge against MicroStrategy, the company would be
required to register with the SEC as a broker/dealer or investment adviser and comply with all
applicable regulations. This would include providing full transparency to investors and filing
regular reports with the SEC. The company would also be required to set up a board of directors
to oversee all Bitcoin-related activities and ensure they comply with all applicable regulations.
The SEC could arrive at an appropriate fine for operating an unsanctioned/unapproved Bitcoin
ETF by taking into consideration the seriousness of the violation, the duration of the violation,
and any associated harm caused by the violation. The SEC also has the authority to impose civil
penalties, including monetary fines and disgorgement of any profits made in violation of
securities law. The amount of the fine would depend on the details of the case, and the SEC
would likely look at a number of factors, such as the size of the holdings and the amount of harm
caused. Further, it is possible that the SEC could require MicroStrategy to pay back any profits
from their Bitcoin holdings. Depending on the severity of the violation, the SEC could also seek
to suspend or revoke the company’s registration as a broker/dealer or investment adviser.
If the SEC was to charge MicroStrategy with operating an unsanctioned/unapproved
Bitcoin ETF, the SEC would need to consider a number of factors when determining an
appropriate fine for the company. These could include the size of the Bitcoin holdings, the
duration of the ETF activity, and the extent of the profits generated by the ETF activity. The SEC
could also consider the company’s compliance history and whether any other regulatory
violations have occurred in the past. Additionally, in the event that the SEC charges
MicroStrategy with operating as a cloaked Bitcoin Exchange Traded Fund (ETF), the company
would need to take all steps necessary to comply with applicable regulations and ensure full
transparency to investors. They would also need to accept any fines or penalties imposed by the
SEC and make any necessary changes to ensure they are compliant with all applicable rules and
regulations. MicroStrategy should continue to adhere to its stated strategy of holding Bitcoin as a
long-term store of value. They should also continue to ensure that their Bitcoin holdings do not
constitute an ETF by limiting their purchases to only a small percentage of the daily volume of
the Bitcoin futures contract. Additionally, MicroStrategy should be aware of any new regulations
or guidance issued by the SEC and ensure that they are compliant with any applicable laws or
regulations.
CASE STUDY: Bitcoin as an Emerging Corporate Treasury Asset -Micro Strategy
Incorporated (MSTR)
Learning objective #1
When it comes to board leadership, corporations need to separate the roles of chairman
and CEO to limit the power of the CEO. The separation of the Chairman and Chief Executive
Officer (CEO) roles is an important consideration for any organization. This decision is
particularly important for MicroStrategy, a publicly traded company, as there is a large group of
stakeholders, ranging from employees to bond holders and equity holders, who must be taken
into account when making decisions regarding the company's corporate governance. In the case
of MicroStrategy, Michael Saylor has held both the CEO and Chairman roles since his founding
of the company in 1989. In August 2022, Saylor relinquished the position of CEO while
remaining Executive Chairman of the company. This decision was likely due to the company’s
announcement of more than $1 billion in digital asset impairments. As a MicroStrategy
stakeholder, I believe this decision was a step in the right direction for the company.
From the perspective of a MicroStrategy stakeholder, separating the Chairman and CEO
roles is an important step in ensuring that the company is properly managed and that the interests
of all stakeholders are balanced. By separating the Chairman and CEO roles, the CEO has less
control over the company's direction and is more accountable for their decisions. This helps to
protect the interests of all stakeholders, as it prevents the CEO from making decisions that might
benefit them but not the overall company. Having the same person in both roles of Chairman and
CEO can lead to a conflict of interest. The CEO may not be making decisions in the best interest
of the shareholders but rather using the company as a way to further their own agenda. This is
especially true for publicly traded companies, as the CEO is not the company's sole owner but
rather accountable to shareholders. By having a separate person in the role of Chairman, there is
more accountability and oversight of the CEO’s decisions. In the case of MicroStrategy, Saylor
is still the Executive Chairman, which means that he still has great power in the company.
However, by relinquishing the CEO role, Saylor has opened up the company to a more diverse
board of directors. This could be beneficial for the company in the long run, as it gives them the
ability to bring in a different perspective and fresh ideas. Additionally, separating the Chairman
and CEO roles can help create a more diverse and balanced board of directors. Having a
Chairman and CEO who are not the same person prevents any one individual from having too
much control over the board. This helps to ensure that all stakeholders have a voice in the
company's direction and can help foster a more collaborative and productive environment.
Finally, having the Chairman and CEO roles separated can help to ensure that the
company is properly managed and that it is being run in the best interests of all stakeholders.
Having a Chairman and CEO who are not the same person helps to ensure that all decisions are
made in the company's best interests and that the CEO is held accountable for their decisions.
This helps to ensure that all stakeholders, from employees to bondholders and equity holders, are
properly taken into account when making decisions about the company's direction. Given all of
these considerations, it is clear why separating the Chairman and CEO roles is an important step
for MicroStrategy. This decision helps to ensure that the company is properly managed and that
all stakeholders are taken into account when making decisions about the company's direction.
Thus, from the perspective of a MicroStrategy stakeholder, the separation of the Chairman and
, 2
CEO roles is an important consideration and should be taken into account when making
decisions about the company's corporate governance.
Learning objective #2
The probability of the Securities and Exchange Commission charging MicroStrategy with
operating as a cloaked Bitcoin Exchange Traded Fund (ETF) is low. MicroStrategy is currently
classified as a publicly traded software company, not a financial institution, and is not registered
with the SEC as a broker/dealer or investment adviser. As such, they are not subject to the same
regulations as a traditional ETF. Although the SEC has been known to crack down on companies
that violate securities laws, MicroStrategy has been very clear that its primary purpose in buying
Bitcoin is to hold it as a long-term store of value, not to speculate on its price. Additionally,
MicroStrategy has taken steps to ensure that their Bitcoin holdings do not constitute an ETF,
such as limiting their purchases to only 0.5% of the daily volume of the Bitcoin futures contract.
If the SEC were to level such a charge against MicroStrategy, the company would be
required to register with the SEC as a broker/dealer or investment adviser and comply with all
applicable regulations. This would include providing full transparency to investors and filing
regular reports with the SEC. The company would also be required to set up a board of directors
to oversee all Bitcoin-related activities and ensure they comply with all applicable regulations.
The SEC could arrive at an appropriate fine for operating an unsanctioned/unapproved Bitcoin
ETF by taking into consideration the seriousness of the violation, the duration of the violation,
and any associated harm caused by the violation. The SEC also has the authority to impose civil
penalties, including monetary fines and disgorgement of any profits made in violation of
securities law. The amount of the fine would depend on the details of the case, and the SEC
would likely look at a number of factors, such as the size of the holdings and the amount of harm
caused. Further, it is possible that the SEC could require MicroStrategy to pay back any profits
from their Bitcoin holdings. Depending on the severity of the violation, the SEC could also seek
to suspend or revoke the company’s registration as a broker/dealer or investment adviser.
If the SEC was to charge MicroStrategy with operating an unsanctioned/unapproved
Bitcoin ETF, the SEC would need to consider a number of factors when determining an
appropriate fine for the company. These could include the size of the Bitcoin holdings, the
duration of the ETF activity, and the extent of the profits generated by the ETF activity. The SEC
could also consider the company’s compliance history and whether any other regulatory
violations have occurred in the past. Additionally, in the event that the SEC charges
MicroStrategy with operating as a cloaked Bitcoin Exchange Traded Fund (ETF), the company
would need to take all steps necessary to comply with applicable regulations and ensure full
transparency to investors. They would also need to accept any fines or penalties imposed by the
SEC and make any necessary changes to ensure they are compliant with all applicable rules and
regulations. MicroStrategy should continue to adhere to its stated strategy of holding Bitcoin as a
long-term store of value. They should also continue to ensure that their Bitcoin holdings do not
constitute an ETF by limiting their purchases to only a small percentage of the daily volume of
the Bitcoin futures contract. Additionally, MicroStrategy should be aware of any new regulations
or guidance issued by the SEC and ensure that they are compliant with any applicable laws or
regulations.
