Switzerland's financial markets supervisor, FINMA, has for the first time approved a listed fund intended for the general public that invests directly in bitcoin. The decision marks a shift from the regulator's previous stance, under which exposure to crypto-assets through regulated fund structures was largely reserved for professional or qualified investors.
The fund has been classified under the Swiss category of "other funds for alternative investments presenting particular risk", a designation that allows retail access but comes with additional disclosure obligations. FINMA has not disclosed the name of the fund provider.
The approval follows an earlier precedent. In 2021, FINMA authorised a fund invested mainly in a basket of cryptocurrencies, but that product was reserved for qualified investors only. The new ETF extends direct bitcoin exposure, through a regulated vehicle, to ordinary retail investors in Switzerland for the first time.
An exception to diversification rules
Swiss fund law typically requires diversification across multiple assets to limit concentration risk. FINMA has granted an exception to these rules specifically to allow the fund to concentrate its holdings on a single asset, bitcoin. The regulator justified the exemption by pointing to bitcoin's trading history and its particularly high trading volumes relative to other cryptocurrencies, arguing that these characteristics distinguish it from the broader crypto-asset market.
FINMA noted that other providers have also filed, or announced plans to file, applications for Bitcoin ETFs, suggesting the approved fund will not remain the only one of its kind on the Swiss market.
Custody and conduct requirements
Alongside the diversification exemption, FINMA has imposed a series of investor protection and operational conditions. Institutions managing or distributing the fund must take steps to reduce operational risks and the risks associated with the custody of bitcoin holdings. The regulator pointed to forthcoming guidance on crypto-asset custody, due to be published on January 12.
Fund documentation must clearly present and explain the risks attached to the product, and institutions marketing the fund are required to comply with the conduct rules set out in the Swiss Financial Services Act, including obligations to assess suitability and appropriateness for individual clients before a sale.
FINMA was explicit that approval does not remove the underlying market risk. The regulator stated that an authorised Bitcoin ETF remains exposed to bitcoin's volatility, meaning that invested capital can lose a significant share of its value. The exemption from diversification rules, in other words, concerns the structure of the fund rather than the risk profile of the asset it holds.
For Swiss retail investors, the decision opens a regulated route into direct bitcoin exposure that did not previously exist outside of unregulated products or direct holdings. For the wider European market, it sets a reference point as other jurisdictions weigh similar requests from fund providers seeking to bring bitcoin ETFs to retail audiences under local securities law.
