Switzerland’s Financial Markets Regulator Approves First Crypto Assets Fund

The Swiss Financial Markets Supervisory Authority (FINMA) on Wednesday said that they had approved the country’s first fund to invest primarily in crypto assets. In a statement, the market regulatory authority said that crypto market index funds were limited to qualified investors and that they were classified as “other funds for alternative investments” with certain risks.

To facilitate serious innovation, the Swiss Financial Markets Supervisory Authority (FINMA) said that it would “consistently apply existing provisions of financial market law in a technology-neutral way,” which it believes will prevent new technology from being used to circumvent existing rules.

To manage the risks associated with crypto assets, the Swiss markets regulatory authority said that it has laid out certain conditions which must be met before approval can be granted. One of such requirements is that the fund can only invest in established assets with sufficiently large trading volumes. In addition, investments must be made through established counterparties and platforms that are based in the member states of the Task Force on Financial Activities and are subject to the corresponding anti-money laundering regulations.

Just to be clear, crypto-assets are cryptocurrencies –yes, the likes of Bitcoin, Etherum, Ripple, and Litecoin. Simply put, they are called assets because they are generally held as investments by people who expect their value to rise. Cryptocurrency assets are based on blockchain or distributed ledger technology. And unlike crypto tokens which are built on an existing blockchain, cryptocurrencies have their own blockchains and are otherwise called the native assets of their blockchains. Cryptocurrency and tokens are unique subclasses of digital assets that utilize cryptography, an advanced encryption technology that assures the authenticity of crypto assets by eradicating the possibility of counterfeiting or double-spending.

Typically, crypto-assets serve as a medium of exchange or store of value. As a medium of exchange, they are used to acquire goods or services. And as a store of value, they can be held or exchanged for a fiat currency at a later date without incurring significant losses in terms of purchasing power.

The proliferation of cryptocurrencies and its volatile nature has in recent months prompted regulators to enact stringent regulatory measures. Binance, the world’s largest crypto exchange platform by volume, has been subject to investigations and probes from regulators all over the world including Malaysia, Germany, Japan Thailand, Netherlands, the United Kingdom, the United States, and South Africa. And countries like China and Russia have completely turned their backs on cryptocurrencies.