Switzerland’s financial regulator, FINMA, has approved the country’s first spot bitcoin exchange-traded fund (ETF) available to retail investors.
The fund will be permitted to invest directly in bitcoin under Swiss investment fund legislation. FINMA said on Tuesday that it had classified the ETF as an “other fund for alternative investments” carrying a specific risk under Swiss law.
The approval represents an exception to the usual requirement for funds to spread investments across a range of assets. FINMA said bitcoin had a longer trading history and significantly higher trading volumes than most other cryptocurrencies, which supported its decision.
The regulator also said other fund providers had either submitted or announced applications for bitcoin ETFs.
Switzerland already has an established market for exchange-traded crypto investments. SIX Swiss Exchange has listed bitcoin exchange-traded products (ETPs) for several years, including a bitcoin and ether product launched in 2019.
FINMA authorised a crypto fund for qualified investors in 2021. However, the existing Swiss bitcoin ETPs are structured as debt securities rather than investment funds.
The newly approved ETF will instead operate under Swiss fund law. That framework includes requirements relating to the custody of assets, operational risks and information provided to investors.
A FINMA spokesperson declined to name the approved fund or its issuer when contacted by The Block, saying the regulator does not provide information about specific institutions.
Investor safeguards
FINMA’s January guidance outlined the operational and custody risks linked to crypto investments. It said supervised institutions must introduce measures to reduce those risks and describe them clearly in the fund’s documentation.
The regulator added that the conduct rules contained in the Financial Services Act would apply when the ETF was marketed and sold.
FINMA stressed that its approval did not alter the risks associated with bitcoin investment. It said the cryptocurrency remained highly volatile and warned that investors could lose a significant portion of their money.
