FINMA approves Switzerland's first Bitcoin ETF for retail investors

Swiss regulator FINMA has approved the country's first exchange-traded fund that invests directly in Bitcoin and is open to retail investors. The agency announced it on Tuesday, October 20. It did not name the issuer.

What the regulator announced

FINMA said interest in crypto investments is growing, above all in Bitcoin. That is why it cleared a fund holding the coin directly for a broad pool of investors, not only qualified ones.

No launch date was given. The regulator only added that several providers have already filed or announced Bitcoin ETF applications. So the approval covers the product model, and other funds may follow the first one.

According to Cointelegraph, the market had been expecting this. Last August, SIX Swiss Exchange said iShares would start trading a Bitcoin exchange-traded product. The coins in it sit in cold storage at Coinbase Custody International Limited.

Switzerland's earlier record

Crypto funds are not new there. In 2021 FINMA authorized a fund for qualified investors that puts money mostly into a basket of cryptocurrencies. The regulator made an exception to standard risk-diversification rules at the time.

Its reasoning was that Bitcoin has a long trading history and a particularly high trading volume compared with other digital assets. The regulator leaned on the same arguments this time.

Risk warning

FINMA stressed separately that Bitcoin investments carry market risk. Invested capital can lose a lot of value, and the reason is simple: crypto is highly volatile.

Prices back that up. On October 20 Bitcoin traded around $82,500, after several sharp swings in recent weeks. For a retail buyer, an ETF removes the hassle of custody but not the price swings.

• The fund buys Bitcoin directly, with no derivatives.
• Access is open beyond qualified investors.
• The launch date and issuer have not been named.
• The risk of losing a large part of the stake remains.

Switzerland and crypto

The country is often described as one of Europe's friendliest to crypto. In 2023 the city of Lugano became one of the first administrations in the world to accept Bitcoin and Tether USDT for all municipal fees. A Spar supermarket in Switzerland has also started accepting Bitcoin recently.

In the US, Bitcoin funds are pulling in money again this week. Cointelegraph reported $527 million of inflows, the biggest since September. The Block separately wrote about $665 million going into BlackRock's IBIT in a single day.

What comes next

Now it depends on the issuers. Once one of them announces a listing date and a fee, it will be clear whether Switzerland gets one fund or several competing ones. The regulator has already confirmed that more than one application exists.