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FINMA approves Switzerland’s first retail Bitcoin ETF
The Swiss regulator waived diversification rules for a fund that holds Bitcoin directly, citing its trading history, but attached custody and risk disclosure conditions
Switzerland’s Financial Market Supervisory Authority has approved the country’s first exchange-traded retail fund that invests directly in Bitcoin, granting it an exemption from the risk diversification rules that normally apply to public funds, FINMA said on October 20.
The fund is classified as an “other fund for alternative investments” with specific risk under Swiss law. FINMA said it granted the exemption because Bitcoin has a long trading history and much higher trading volume than other cryptocurrencies.
The regulator did not name the provider. Several signs point to BIT Asset Management, formerly Matrixport Asset Management, though neither FINMA nor the company has confirmed it, finews.ch reported. Existing Bitcoin products in Switzerland trade as exchange-traded products rather than as funds.
Approval comes with custody and disclosure conditions
Supervised institutions involved with the fund must take steps to mitigate operational and custody risks set out in FINMA guidance published on January 12, and fund documents must clearly highlight and explain the risks. Point-of-sale conduct rules under Switzerland’s Financial Services Act apply, including warnings about volatility and the risk of loss.
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“The market risk associated with Bitcoin remains very high,” FINMA said, adding that investments in Bitcoin remain highly risky even through an approved ETF.
FINMA previously authorized a fund for qualified investors that invests in a basket of cryptocurrencies in 2021. The regulator said other fund providers have already submitted or announced applications for Bitcoin ETFs.