The Swiss financial supervisory authority FINMA has approved the first crypto fund, named Crypto Market Index Fund, for distribution to qualified investors, including pension funds.
Asset management firm Crypto Finance Asset Management runs the fund in partnership with fund management firm PvB Pernet von Ballmoos; SEBA Bank is the fund’s custodian.
The bank has been granted a licence to act as custodian for Swiss collective investment schemes under article 72 CISA (KAG), it said.
The crypto fund tracks the SIX Crypto Market Index 10, which measures the performance of the largest and most liquid crypto assets and tokens, and provides a benchmark for the asset class.
Bernadette Leuzinger, chief executive officer at Crypto Finance, said: “The investment fund enables clients of innovative wealth and asset management firms to participate in this upcoming asset class and to further diversify their portfolio in a secure and regulated way.”
According to FINMA, the Crypto Market Index Fund operates under the category “other funds for alternative investments” with particular risks, and distribution is restricted to qualified investors.
The regulator acknowledged that crypto assets involve particular risks, therefore it has given its approval to the operation of the fund specifying a series of requirements.
The fund, according to the regulator, may only invest in established crypto assets with a sufficiently large trading volume.
The exact specifications with regards to crypto assets with sufficiently large trading volumes are part of the fund contract and relate to the minimum requirements for the average market capitalisation of the past 30 days as well as the daily liquidity, a spokesperson for FINMA told IPE.
The investments must be made through established counterparties and platforms that are based in a member country of the Financial Action Task Force (FATF), and that are subject to corresponding anti-money laundering regulations, it said.
Specific requirements apply with regards to risk management and reporting for the institutions involved in the management and custody.
Risk management should also capture in particular technological and operational risks, such as the integrity of the blockchain, safe custody and transfer of assets. It must also take into account additional legal and compliance risks or specific counterparty risks, for example in connection with unregulated trading venues and brokers, the spokesperson said.
The reporting includes key developments in the fund and information on how the institution involved deals with the specific risks of the product, the spokesperson added.
In Germany, investors are starting to get familiar with crypto assets following the introduction of a law allowing Spezialfonds to invest one fifth of their funds in the new asset class.