The Swiss Financial Market Supervisory Authority FINMA today approves the first crypto fund according to Swiss law. The fund, which is restricted to qualified investors, invests primarily in digital assets.
This is the first time, FINMA has approved a Swiss fund that invests primarily in digital assets, such as Bitcoin and Ethereum.
The fund concerned goes by the name of the “Crypto Market Index Fund”, an investment fund according to Swiss law belonging to the category “other funds for alternative investments” with particular risks. Distribution of this fund is restricted to qualified investors.
The growing popularity of Bitcoin and other cryptocurrency has forces banks and financial institutions to consider crypto investment as a new product. Lately, many global banks has formed new crypto division to formulate strategies and launch crypto focused products. Crypto funds allow investors to securely invest in this new asset class.
Read More: Why Every Bank Will Need a Cryptocurrency Asset Strategy?
Consideration of the particular risks
FINMA applies the existing provisions of financial market laws in a consistently technology-neutral way, i.e. in keeping with the “same risks, same rules” principle. In doing so, it makes sure that new technologies are not being used to circumvent the existing rules and that the protective goals of financial market legislation are preserved.
The new approval is based on a calculated strategy. Since cryptoassets involve particular risks, FINMA also tied the approval to specific requirements in the present case. For instance, the fund may only invest in established digital assets such as Bitcoin. The inclusion of a certain crypto will be decided based on “a sufficiently large trading volume”. Furthermore, the investments must be made through established counterparties and platforms that are based in a member country of the Financial Action Task Force (FATF) and are subject to corresponding anti-money laundering regulations. Finally, there are specific requirements with regard to risk management and reporting for the institutions involved in the management and custody.
Unlike other regulators, FINMA has been quite positive towards crypto space. Earlier this year, the Swiss regulator granted a securities house license to Crypto Broker AG, the brokerage subsidiary of the Crypto Finance Group, a leading digital asset enabler for the finance sector.
FINMA has taken a positive step towards offering regulated crypto investment option to users. At the same time, it makes sure that it is fully compliant and relatively les risky.
