Swiss law makes public funds spread their risk, so the regulator granted an exemption for a fund holding one asset. It has not said whose fund it is.
Switzerland's Financial Market Supervisory Authority has approved the country's first exchange-traded retail fund that invests directly in Bitcoin, the regulator said on Tuesday, and it had to set aside one of its own fund rules to do it. Swiss law places the fund in the category of other funds for alternative investments with a specific risk.
The obstacle was risk diversification. Swiss rules expect a fund sold to the public to spread its holdings, which a fund built to hold a single asset cannot do. FINMA approved an exemption from those rules in this case, reasoning that Bitcoin has a long trading history and a particularly high trading volume compared with other cryptocurrencies. That argument rests on liquidity and track record rather than on price risk, which the regulator treated separately.
Its warnings were explicit. “The market risk associated with Bitcoin remains very high,” FINMA said, adding that an investment made through an approved ETF remains highly risky and that the capital invested may lose a significant amount of its value. Firms selling the fund must apply the conduct rules in the Financial Services Act at the point of sale, including explicit warnings about volatility and the risk of loss, and must pay particular attention to the suitability assessment. The fund documents have to highlight and explain the risks.
Institutions involved with the fund also have to mitigate operational and custody risks along the lines FINMA set out in guidance published on January 12 this year. That guidance asks, among other things, that client crypto assets held in custody stay outside the custodian's estate if the custodian fails, the Swiss finance outlet finews.ch reported. Bankruptcy segregation is the part of crypto custody that separates a fund structure from a balance on an exchange.
Swiss investors have been able to buy exchange-traded Bitcoin exposure for years, so the novelty is the wrapper rather than the access. The products already trading on the Swiss exchange are exchange-traded products, collateralized debt securities issued against the asset. They trade on a regulated venue but are not collective investment schemes and are not supervised as funds. The newly approved vehicle sits inside the fund law instead, which brings fund-specific requirements on custody, risk management and investor disclosure.
FINMA has approved a crypto fund before. In 2021 it authorized a fund investing primarily in a basket of cryptocurrencies, distributed only to qualified investors. This week's decision moves on two axes at once: one asset instead of a basket, and ordinary investors instead of professional ones.
The announcement leaves out the product's basic terms. FINMA did not name the provider, the fee, the ticker or a launch date. Some signs point to BIT Asset Management, formerly Matrixport Asset Management, though neither the regulator nor the company has confirmed it, and FINMA did not deny the name when finews.ch asked. Until the issuer publishes its documents, the only disclosed terms of Switzerland's first Bitcoin ETF are the conditions the regulator attached to it.
Approval is also not the same as trading. A clearance says a product may exist on agreed terms, not that anyone can buy it, a gap that appeared elsewhere this month when venues won permission for leveraged funds that still could not trade. FINMA said other fund providers have submitted or announced applications for Bitcoin ETFs, so the first approval is unlikely to be the only one for long.
The reasoning FINMA gave is specific to one asset. Trading history and trading volume are the grounds it cited for waiving diversification, and they are properties another token would have to match before a single-asset fund around it could ask for the same treatment. Nothing in the announcement extends the exemption to crypto funds in general. Spot Bitcoin ETFs have traded in the United States since January 2024, where the question was an exchange listing standard rather than a fund diversification rule.
The decision lands in the same month that the European Banking Authority takes over direct supervision of USDC's reserves in the European Union. Switzerland is outside that framework and regulates through its own fund and conduct law, which is why the question here was a diversification exemption rather than an authorization under European rules.
The practical effect for now is narrower than the announcement sounds. One fund has permission, no one has said which, and nobody has published the terms a buyer would need to judge it.
