Tokenised Funds in Switzerland: Regulatory Framework, Fund Structures, and Distribution

The tokenisation of investment fund units is reshaping how Swiss asset managers structure, distribute, and administer collective investment schemes. By representing fund participations as DLT securities under Article 973d of the Code of Obligations, Swiss fund promoters can offer investors programmable, instantly transferable fund units that settle atomically and enable real-time portfolio transparency. This convergence of distributed ledger technology with the Collective Investment Schemes Act (CISA) framework is producing a new generation of fund products that retain full regulatory compliance while exploiting the operational advantages of tokenisation.

Regulatory Architecture

Swiss investment funds are governed by the Collective Investment Schemes Act (CISA) and its implementing ordinances, administered by FINMA. The tokenisation of fund units does not create a separate regulatory category; rather, tokenised fund units are treated as a technological evolution of existing fund structures. FINMA has confirmed that the legal qualification of a collective investment scheme is determined by its economic function, not its technological implementation.

This principle-based approach means that a tokenised fund must satisfy the same requirements as its conventional counterpart. An open-ended contractual fund (Anlagefonds) issuing tokenised units must comply with the same investment restrictions, risk diversification rules, liquidity management obligations, and investor protection standards as a fund issuing traditional units. The fund management company must hold a FINMA licence, and the custodian bank must meet the qualification requirements set out in the CISA Ordinance.

The DLT Act’s introduction of DLT securities provides the legal mechanism for tokenised fund units. When fund units are structured as Registerwertrechte (ledger-based securities), they acquire the legal status necessary for transfer, pledge, and enforcement through the distributed ledger. The registration agreement between the fund management company and the unit holders establishes the terms governing the creation, transfer, and redemption of tokenised units.

Fund Structures Amenable to Tokenisation

Several Swiss fund structures lend themselves to tokenisation, each with distinct characteristics and regulatory considerations.

Contractual funds (Anlagefonds) under Articles 25–35 CISA represent the most common structure for tokenised fund offerings. In this model, the fund management company creates units that represent contractual claims against the fund assets. Tokenising these units enables automated subscription and redemption processing, with smart contracts enforcing compliance checks such as investor qualification verification and subscription limits.

Investment companies with variable capital (SICAV) under Articles 36–52 CISA offer an alternative structure where fund participations take the form of shares in a corporate vehicle. Tokenising SICAV shares requires coordination between the DLT registry and the commercial register, as changes in share capital must be reflected in both systems. The SICAV structure is particularly suited to institutional investors who prefer the governance framework of a corporate vehicle.

Limited partnerships for collective investment (LP) under Articles 98–109 CISA are increasingly used for alternative asset classes such as private equity and real estate. Tokenising limited partnership interests can facilitate secondary market trading of traditionally illiquid positions, though the transferability restrictions common in LP agreements must be encoded into the smart contract logic.

Distribution and Cross-Border Considerations

The distribution of tokenised fund units in Switzerland is subject to the Financial Services Act (FinSA) and the Financial Institutions Act (FinIA). Fund management companies distributing tokenised units to retail investors must produce a key information document (KID) and, where applicable, a prospectus. The classification of investors as retail, professional, or institutional determines the applicable conduct-of-business rules and the level of investor protection.

Cross-border distribution of Swiss tokenised funds requires careful navigation of host-country regulations. Within the European Union, Swiss funds do not benefit from the UCITS or AIFMD marketing passports, meaning that distribution typically relies on national private placement regimes or reverse solicitation. The tokenised nature of the fund units adds an additional layer of complexity, as host-country regulators may apply their own DLT or crypto-asset regulations to the distribution process.

The European Union’s Markets in Crypto-Assets Regulation (MiCA) generally excludes financial instruments from its scope, meaning that tokenised fund units qualifying as transferable securities would fall under MiFID II rather than MiCA. However, the classification depends on the specific characteristics of the token and the host-country regulator’s interpretation, creating a patchwork of requirements that Swiss fund promoters must navigate on a jurisdiction-by-jurisdiction basis.

Operational Advantages of Tokenised Funds

The operational case for fund tokenisation rests on several pillars. Settlement efficiency is perhaps the most immediate benefit: tokenised fund units can be subscribed, redeemed, and transferred with near-instant finality, compared to the T+2 or T+3 settlement cycles typical of traditional fund transactions. This acceleration reduces counterparty exposure and frees up capital that would otherwise be tied up during the settlement window.

Automated compliance through smart contracts enables fund management companies to embed regulatory requirements directly into the token logic. Know-your-customer (KYC) and anti-money-laundering (AML) checks can be performed at the point of transfer, with the smart contract blocking transactions that do not meet compliance criteria. Investment restrictions, concentration limits, and investor qualification requirements can similarly be enforced programmatically, reducing the risk of human error and the cost of manual compliance monitoring.

Transparency and reporting capabilities are enhanced by the immutable audit trail that DLT provides. Fund administrators can offer investors real-time visibility into their holdings, while regulators can access transaction data for supervisory purposes. The standardisation of fund data on-chain also facilitates interoperability between different fund platforms and service providers.

Transfer agency functions — including unitholder registration, distribution processing, and corporate action management — can be partially automated through smart contracts. While full automation of transfer agency services remains an aspiration, the digitisation of core processes is already producing measurable cost savings for Swiss fund managers who have adopted tokenised structures.

Custody and Safekeeping

The custody of tokenised fund units raises specific questions under Swiss law. The CISA requires that fund assets be held by a custodian bank that is independent of the fund management company. For tokenised funds, the custodian must be capable of safekeeping the fund’s assets — which may include digital assets — and maintaining the integrity of the tokenised unit registry.

Swiss banks offering custody services for tokenised fund units have adopted various models. Some maintain the private keys associated with the fund’s DLT securities in institutional-grade hardware security modules (HSMs), while others employ multi-signature arrangements that distribute key management across multiple authorised parties. The choice of custody model affects the fund’s operational resilience, its exposure to key-person risk, and its compliance with FINMA’s outsourcing requirements.

FINMA’s guidance on the segregation of digital assets in custody has particular relevance for tokenised funds. In the event of a custodian’s insolvency, tokenised fund units held in segregated custody should be separable from the custodian’s estate, provided that the custody arrangements satisfy the requirements for segregation under the Banking Act and the Debt Enforcement and Bankruptcy Act.

Pricing, Valuation, and NAV Calculation

The net asset value (NAV) calculation for tokenised funds follows the same principles as for traditional funds, but the technological infrastructure enables more frequent — potentially continuous — NAV computation. Smart contracts can be programmed to calculate NAV based on real-time price feeds from oracle networks, enabling intraday or even continuous pricing of fund units.

However, more frequent NAV calculation introduces challenges around the reliability and manipulation resistance of price data sources. Oracle networks that supply price feeds to smart contracts must be sufficiently decentralised and robust to prevent price manipulation attacks. Fund management companies bear responsibility for the accuracy of NAV calculations regardless of the technological means employed, and FINMA expects appropriate validation and oversight of automated pricing mechanisms.

The valuation of illiquid assets within tokenised fund portfolios — such as real estate, private equity, or infrastructure — presents particular challenges for automated NAV calculation. These assets typically require periodic independent appraisals rather than continuous market-based pricing, and the fund’s smart contracts must accommodate this hybrid approach.

Market Developments and Outlook

The Swiss tokenised fund market has matured considerably since the first tokenised fund offerings in 2020. Established Swiss asset managers have launched tokenised share classes alongside traditional share classes, enabling investors to choose their preferred settlement and custody infrastructure. This hybrid approach allows fund managers to serve both traditional and DLT-native investors within a single fund structure.

The integration of tokenised funds with decentralised finance (DeFi) protocols is an emerging trend that raises both opportunities and regulatory questions. Some Swiss fund managers have explored the use of tokenised fund units as collateral in DeFi lending protocols, enabling investors to access liquidity without redeeming their fund positions. FINMA has not yet issued specific guidance on this practice, and fund managers proceeding in this area must carefully assess the regulatory, counterparty, and smart contract risks involved.

Looking ahead, the standardisation of tokenised fund units through industry initiatives is expected to facilitate interoperability and secondary market liquidity. The Swiss Bankers Association and the Asset Management Association Switzerland have both engaged with the development of standards for tokenised fund units, and their work is expected to produce recommendations that will further institutional adoption.

For related analysis, see our coverage of tokenised equities and the SDX clearing and settlement framework.

Donovan Vanderbilt is a contributing editor at ZUG DLT, covering distributed ledger technology law, regulation, and institutional adoption from Zurich. The Vanderbilt Portfolio AG provides research and analysis on Swiss digital asset infrastructure.