Switzerland has approved its first investment fund that invests in Bitcoin

The Swiss financial regulator, FINMA, has for the first time authorized the launch of an exchange-traded investment fund that invests directly in Bitcoin. The new fund, Bitcoin Fund ETF (BBIT) by BIT Asset Management, is scheduled to begin trading its shares on the SIX Swiss Exchange in November.

The fund intends to hold actual Bitcoin, rather than using futures contracts to track the cryptocurrency's price.

Other Bitcoin-related exchange-traded products (ETPs)—such as the 21Shares Bitcoin ETP, WisdomTree Physical Bitcoin, and iShares Bitcoin ETP—are already traded in Switzerland. Legally, these fall under the broader category of ETPs—collateralized debt securities whose value is linked to the price of the leading cryptocurrency. Unlike ETFs, these instruments are not classified as investment funds.

BBIT is designed to operate under Swiss investment fund legislation. Its assets are legally segregated from the property of the management company. BIT Asset Management views this structure as an advantage over existing ETPs, as the latter involve obligations from the issuer to the security holders.

FINMA stated that it allowed BBIT to deviate from standard asset diversification requirements for investment funds, citing Bitcoin’s long global trading history and high liquidity. In exchange, the regulator has required BIT Asset Management to account for the risks associated with storing digital assets and to inform clients that such investments carry the potential for significant capital loss should the price of Bitcoin fall.

The Swiss regulator approved its first cryptocurrency-based investment fund in 2021—a fund that tracked the "Crypto Market 10" index, which followed the price performance of ten major crypto assets.