New practice of the CSSF

In February 2026, the CSSF released an updated FAQ on Crypto‑Assets, aligning its supervisory approach with the entry into force and application of the European Markets in Crypto‑Assets Regulation (MiCAR). The following updates stand out:

  • UCITS (Undertakings for Collective Investment in Transferable Securities) may now hold indirect exposure of up to 10% of their NAV to crypto-assets. Indirect means: through transferable securities not embedding any derivatives, such as exchange‑traded products (ETPs) and exchange‑traded funds (ETFs). Direct ownership of cryptocurrencies remains prohibited, reflecting persisting concerns around investor protection within the UCITS framework. Structured as financial instruments, indirect investments in crypto-assets are not subject to MiCAR.
  • AIFs (Alternative Investment Fund) accessible to retail investors (beyond well‑informed investors, which includes institutional and professional investors as defined by the law) are permitted to include direct as well as indirect crypto‑assets in their portfolios, capped at 10% of their NAV.
  • Luxembourg authorised AIFMs managing an AIF with direct or indirect exposure exceeding 10% of its NAV require a license extension from the CSSF for the strategy “Other-Other Fund-Crypto-assets”.

When targeting retail investors, the CSSF expects AIFMs to have adequate internal control functions in place to address the specific risks of crypto‑asset investments, including volatility, liquidity and technological risks. Furthermore, any possibility to invest in crypto‑assets must be disclosed in the UCITS or AIF prospectus, effectively subjecting such investments to ex‑ante supervisory scrutiny by the CSSF.

This marks a notable shift from previous CSSF guidance, which permitted crypto exposure solely for alternative investment funds (AIFs) that were not accessible to retail investors. The update follows the European Securities and Markets Authority’s (ESMA) 2025 confirmation that a limited and indirect crypto allocation is compatible with the UCITS framework when structured through eligible securities.

With Luxembourg being Europe’s largest investment fund hub, the new position may influence regulatory developments across other European jurisdictions.

Crypto investments by Swiss investment funds

Switzerland has been a pioneer in digital assets with its crypto friendly Crypto Valley since 2013, early guidance of the Swiss Financial Market Supervisory Authority (FINMA) of 2018 and the enactment of a progressive framework for DLT assets in 2021. That said, the Swiss regulatory landscape for investment funds presents a more mixed picture.

Non-Swiss investment funds

Non-Swiss investment funds need FINMA approval to be offered in Switzerland to non-qualified (retail) investors, whereas foreign investment funds offered only to qualified investors enjoy relatively easy access to Swiss investors. Approval of foreign investment funds depends on adequate regulation and supervision of the fund in its domestic jurisdiction. In practice, only UCITS are eligible for authorisation as EU funds offered to Swiss retail investors. With the new practice of CSSF, Luxembourg retail investment funds investing up to 10% indirectly in crypto-assets would generally be eligible to be distributed to Swiss retail investors.

Swiss Securities Funds

As to Swiss Securities Funds, which may be open to qualified and to retail investors, they can invest in listed securities, and up to 10% of the assets under management in other assets such as crypto-assets. Therefore, theoretically a Swiss Securities Fund may invest indirectly and even directly in crypto-assets. However, FINMA would certainly require adequate risk management and compliance. We are not aware of any Swiss Securities Funds investing in crypto-assets.

Swiss Other Funds for Traditional Investments or for Alternative Investments

So-called Swiss Other Funds for Traditional Investments or for Alternative Investments may invest in specific assets such as securities, derivatives or structured products that are illiquid, highly volatile, less risk-diversified or hard to value, and FINMA may allow other assets such as crypto-assets. In practice, this category is limited to qualified investors.

Within the last five years, only one Swiss Other Fund for Alternative Investments specifically investing in crypto-assets and limited to qualified investors has been approved by FINMA: the Crypto Market Index Fund established in 2021. FINMA has imposed various restrictions, including limiting investments to crypto‑assets with appropriate liquidity and risk characteristics, requiring the use of reputable counterparties and platforms subject to robust AML/CFT oversight as well as custody and reporting requirements for management and custody.

Limited Qualified Investor Fund (L‑QIF)

With the introduction of the Swiss Limited Qualified Investor Fund (L‑QIF) as of 1 March 2024, broadly inspired by the Luxembourg RAIF, new structuring possibilities arise. The L‑QIF is reserved for qualified investors and does not require approval or direct supervision by FINMA. However, it must be managed by a FINMA‑supervised institution. It is subject to very limited investment regulation and, unlike the RAIF, is not bound by statutory risk‑diversification requirements. As a result, the L‑QIF is well‑suited for alternative strategies, including investments in crypto‑assets, but not open to retail investors.

Investment in crypto-assets by a Swiss collective investment scheme, including through an L‑QIF, triggers specific regulatory requirements at the level of the fund manager. The manager of collective assets must be FINMA‑authorised and have appropriate organisational regulations in place, including risk management, compliance and internal guidelines covering crypto-assets. FINMA regularly requires that sufficient expertise exists for the relevant asset classes.

In addition, suitable custody remains a key challenge. According to the FINMA Guidance 01/2026 of January 2026 on the custody of crypto‑based assets, crypto-assets held by Swiss collective investment schemes must generally be kept with a Swiss custodian bank. Delegation of custody to a foreign service provider is permissible only via the Swiss custodian bank and subject to the foreign provider being prudentially supervised on an equivalent basis and foreign law ensuring bankruptcy‑remote segregation of the crypto-assets.

As a result, investments in crypto-assets by Swiss investment funds would, in theory, also be accessible to retail investors, but in practice are largely limited to qualified investors. However, Luxembourg UCITS with an exposure of up to 10% to crypto-assets may, in principle, be admissible for distribution to Swiss retail clients. Otherwise, Swiss retail investors seeking crypto exposure therefore remain largely restricted, for example, to crypto‑related ETPs listed on SIX Swiss Exchange or BX Swiss.

With regard to Swiss crypto funds intended to be distributed in the EU, it should be noted that there is generally no passporting regime available for such products without an appropriate EU‑based fund or distribution setup, and that additional structural and tax‑related hurdles may significantly limit or complicate their cross‑border marketing.

FINMA is in ongoing dialogue with its European peers. In light of CSSF’s move to allow retail investor funds to make limited investments in crypto-assets, it will be interesting to observe how the Swiss market develops going forward.

How we can support: cross-border expertise

The evolving regulatory landscape in both the EU and Switzerland creates new opportunities for asset managers, fund sponsors and institutional investors seeking to integrate digital assets into their strategies. Our cross‑border teams are uniquely positioned to advise on:

  • Structuring crypto‑compatible investment funds in Luxembourg, Switzerland, the Netherlands and Belgium
  • Compliance with CSSF, the European Securities and Markets Authority (ESMA) and FINMA expectations on crypto exposure
  • Cross‑border distribution strategies and regulatory passporting
  • Governance, custody and risk‑management considerations for digital‑asset products

Our integrated, multi‑jurisdictional and multi-disciplinary approach ensures that clients can confidently navigate the evolving fund landscapes in the various jurisdictions.

Contact

If you would like assistance assessing the impact of these regulatory shifts or exploring new fund opportunities, our Swiss and Luxembourg teams stand ready to support you.