The index fund is the first such investment product to receive regulatory approval in Switzerland
The Financial Markets Supervisory Authority (FINMA), Switzerland’s financial markets regulator, has approved the first crypto index fund in the country, the watchdog said on Wednesday.
“For the first time, FINMA has approved a Swiss fund that invests primarily in cryptoassets, that is to say in assets based on the blockchain or distributed ledger technology,” the regulator said in an announcement posted on its website.
The product, dubbed “Crypto Market Index Fund”, has been tailored to cater to qualified investors only and its approval is based on Swiss law, the agency noted. According to FINMA, the fund falls under the “other funds for alternative investments” group of investment products for its notable risks.
The Swiss financial markets authority also noted that the process of approving new financial products follows “existing provisions” of the law and that the aim is to ensure they promote serious innovations. To achieve this goal, the regulator applies legal principles that curb the use of new technology in the potential circumvention of established rules.
In the specific case of the Crypto Markets Index Fund, FINMA explained that it based the approval on fulfilment of current requirements relating to cryptoassets.
As such, the fund’s provider, Crypto Finance, has been mandated to only invest in major cryptocurrencies that offer “sufficiently large trading volume[s].”
Other regulatory requirements that must be adhered to include having the fund administered via established counterparties and crypto platforms domiciled in a country signed up to the Financial Action Task Force (FATF). The investments must also ensure compliance with given anti-money laundering (AML) regulations.
Crypto Finance has revealed that Swiss firm PvB will administer the new fund, with SEBA Bank offering custody services. Meanwhile, the cryptoasset fund will track the Crypto Market Index 10, currently overseen by top investment provider SIX Swiss Exchange.