TL;DR
- FINMA has approved Switzerland’s first spot Bitcoin ETF for retail investors, allowing the fund to invest directly in BTC.
- The regulator granted an exemption from diversification rules and established requirements for custody, risk management, and investor disclosures.
- Switzerland already had exchange-traded products linked to Bitcoin, but the new ETF will be subject to investment fund regulations.
The Swiss Financial Market Supervisory Authority (FINMA) approved the country’s first spot Bitcoin ETF for retail investors. The fund will be allowed to invest directly in BTC and will operate under Swiss investment fund regulations.
The regulator classified the ETF as an alternative investment fund with specific risks and granted an exemption from standard diversification requirements.
FINMA justified the decision based on Bitcoin’s trading history and trading volumes, which are considerably higher than those of most other cryptocurrencies.
FINMA Sets Special Conditions for the Bitcoin ETF
The authorization allows the fund to invest in a single asset, even though general regulations require investment diversification to reduce risks.
However, the ETF must comply with specific custody, operational security, and investor disclosure requirements.
FINMA reiterated that supervised institutions must take measures to mitigate the risks associated with crypto assets and clearly explain those exposures in the fund’s documentation.
The conduct requirements established under Swiss financial services legislation will also apply when the ETF is marketed to investors.
The regulator warned that approval does not eliminate Bitcoin’s volatility or the possibility of substantial investment losses.
FINMA did not identify the approved fund or its issuer. A spokesperson explained that the regulator does not disclose institution-specific information.
Switzerland’s Bitcoin Investment Products
The SIX Swiss Exchange has offered cryptocurrency exchange-traded products for years, including instruments linked to Bitcoin and Ethereum.
In 2019, the exchange began trading a product offering exposure to both cryptocurrencies. Later, in 2021, FINMA authorized a cryptocurrency investment fund for qualified investors.
The difference lies in their legal structure. Existing exchange-traded products, known as ETPs, are classified as debt securities, while the newly approved ETF will be regulated as an investment fund.
This entails specific obligations concerning asset custody, operational risks, and the information provided to retail investors.
The regulator also confirmed that other asset managers have submitted applications or announced plans to launch Bitcoin ETFs in the Swiss market.
