Swiss regulator FINMA approves country's first spot bitcoin ETF for retail investors

Switzerland's financial regulator FINMA has approved the country's first spot bitcoin exchange-traded fund for retail investors, allowing a fund to invest directly in the cryptocurrency under Swiss investment fund rules.

The Swiss Financial Market Supervisory Authority said Tuesday that the ETF falls into the category of "other funds for alternative investments" with a specific risk under Swiss law. Bitcoin Bitcoin (BTC) has a longer trading history and much higher trading volumes than most other cryptocurrencies, FINMA said, which allowed it to make an exception to the rules requiring funds to diversify their investments. Other fund providers have also submitted or announced applications for bitcoin ETFs, the regulator said.

Switzerland is no stranger to exchange-traded crypto investments. The SIX Swiss Exchange has listed bitcoin exchange-traded products (ETPs) for years, including a bitcoin and ether product launched in 2019. FINMA also authorized a crypto fund for qualified investors in 2021. 

Existing Swiss bitcoin ETPs are debt securities, rather than investment funds. FINMA's newly approved ETF falls under Swiss fund law, with rules covering custody, operational risks, and investor disclosures.

A FINMA spokesperson declined to identify the approved fund or its issuer when contacted by The Block, saying it does not provide institution-specific information.

FINMA sets out investor safeguards

FINMA's January guidance set out the operational and custody risks associated with crypto investments. FINMA said supervised institutions must take measures to mitigate those risks and clearly explain them in fund documents, with the Financial Services Act rules of conduct applying when the ETF is sold.

FINMA said approving the ETF does not change the risks of investing in bitcoin. The cryptocurrency remains highly volatile, and investors could lose a significant portion of their money, it said.