Swiss financial regulators have approved a bitcoin spot exchange-traded fund (ETF) for retail investors for the first time. On Oct. 21 (local time), blockchain media outlet CoinPost reported that the Swiss Financial Market Supervisory Authority (FINMA) said in an official statement on Oct. 20 that it had approved the listing of a spot ETF that invests directly in bitcoin.

The name of the approved fund and its manager were not disclosed. FINMA said interest in investing in cryptocurrencies, including bitcoin, is growing, but stressed the product remains a high-risk investment.

FINMA said it recognised an exception to diversification rules reflecting that bitcoin has higher trading volume and a longer history than other cryptocurrencies. This is read as meaning bitcoin was not viewed the same as other digital assets within the existing regulatory framework.

The sales rules strengthened investor protection measures. FINMA said that by applying Switzerland's Financial Services Act (FIDLEG), it provides a higher level of investor protection than direct investment in cryptocurrencies. It plans to require fund documents to clearly state risk factors and to ensure investors are sufficiently informed of them.

FINMA said, in line with the supervisory notice it made public in January, institutions must prepare measures to reduce operational risks and asset custody risks. It also required that when offering financial products with cryptocurrencies as underlying assets, institutions strictly comply with conduct standards under FIDLEG and clearly disclose price volatility and the possibility of losses.

Suitability reviews are also a key element of the approval conditions. FINMA said financial institutions must pay particular attention to appropriateness and suitability assessments when selling products to investors. It judged that even if the product takes the form of a mainstream financial product as a bitcoin spot ETF, the level of risk itself does not fall.

The authorities again warned about investment risks. FINMA stressed that the approved bitcoin spot ETF is also a high-risk product and that large losses could occur due to high price volatility. It urged that these risks be fully considered when deciding the size of an investment.

The approval was seen as a signal that Switzerland is beginning to accept bitcoin spot ETFs as mainstream financial products, while also sending a message that it will pursue regulation aimed at strengthening sales, custody and disclosure obligations. Going forward, market attention is expected to focus on the specific structure of the approved product, who will manage it, and the standards under which it will be sold to retail investors.