TLDR
FINMA approved the first Swiss-law retail ETF that invests directly in Bitcoin.
The fund received an exemption from diversification rules because of Bitcoin’s long trading history and high trading volume.
Custody rules, bankruptcy protections and FinSA sales duties still apply.
FINMA did not name the issuer, fees or a trading start date.
The regulator warned that investors can still lose substantial value from Bitcoin price swings.
Swiss financial regulator FINMA has approved the first retail exchange-traded fund under Swiss law that invests directly in Bitcoin. The decision was announced on Oct. 20.
The approval includes an exemption from diversification rules. This lets the fund hold concentrated exposure to Bitcoin while keeping custody and sales safeguards in place.
Why FINMA Granted the Exemption
FINMA said Bitcoin’s long trading history justified the exception. It also pointed to Bitcoin’s particularly high trading volume compared with other cryptocurrencies.
The fund falls into a Swiss category called “other funds for alternative investments.” This category covers funds that carry particular risk.
Under normal rules, a retail fund must meet diversification requirements. FINMA described this approval as an exception for this specific case.
The new fund differs from the exchange-traded products, or ETPs, that Swiss investors already know. Swiss exchange SIX describes its ETPs as collateralized debt securities, not collective investment funds.
That means the two products are separate legal arrangements. A fund holds Bitcoin directly, while a debt security is linked to Bitcoin’s price performance.
FINMA’s announcement did not name the fund’s issuer. It also did not share fees or a date when trading will begin.
The regulator said other providers have submitted or announced Bitcoin ETF applications. However, it did not report any further approvals.
Custody and Sales Rules Still Apply
FINMA said supervised institutions must still reduce operational and custody risks. It referred to custody guidance it published on Jan. 12.
That guidance calls for technical expertise, strong infrastructure and properly monitored providers. It also requires clear bankruptcy protections.
Under those rules, customers’ crypto assets must stay outside a custodian’s bankruptcy estate. Using an outside provider does not remove responsibility from the authorized financial institution.
FINMA also reminded institutions offering crypto-linked products to follow the Swiss Financial Services Act, known as FinSA. The law sets duties for how financial products are sold.
The regulator stressed the need for clear warnings about volatility and possible losses. It also called for careful suitability and appropriateness checks for buyers.
Fund documents must explain the risks in a prominent way. These rules cover how assets are held, how the product is explained and how it is sold.
FINMA said the market risk of Bitcoin stays with the buyer. It warned that investments can lose substantial value through sharp price swings, even inside an approved ETF.
The diversification exemption offers no protection against a fall in Bitcoin’s price.
At the time of reporting on Oct. 21, Bitcoin traded at about $83,188. The price was up 2.30% over 24 hours but down 0.23% over seven days and 0.65% over 30 days.
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