A digital-asset fund manager structuring an open-ended vehicle for institutional investors faces a decision that cannot be walked back cheaply: how the fund's redemption and liquidity terms are drafted, and whether Switzerland's legal and regulatory environment supports the profile of asset, investor and bank that the business actually has. Get this wrong at formation, and the result is locked-in tax leakage, investor complaints at the first gate, and a banking relationship that refuses to clear anything illiquid. Get it right, and Switzerland's common-law-influenced contract tradition, its mature asset-management regime supervised by FINMA (the Swiss Financial Market Supervisory Authority), and its well-developed private-fund practice give a manager genuine structural advantages.
Redemption and liquidity terms in Switzerland are governed primarily by the applicable collective-investment-scheme regime, FINMA's fund regulations, and – where the vehicle is a contractual fund or a SICAV – by the constitutive documents filed with and approved by FINMA. The short answer for a digital-asset manager is this: Switzerland does not impose a single mandatory redemption frequency, but FINMA expects liquidity terms that match the underlying asset class, and any mismatch is a point of examination on authorisation and on ongoing supervision. The sections below map the legal basis, the process, the cross-border dimension, and the decision a manager must make before filing.
Why liquidity terms matter more at formation than at the first redemption request
Liquidity mismatches are the most common structural defect we see in digital-asset fund documents reviewed at the point of a problem – whether that is a gate dispute, a regulatory query, or a secondary-market sale of interests. The fund's constitutional documents fix the redemption frequency, notice periods, gate provisions, side-pocket authority, and in-kind distribution rights at the moment of authorisation. FINMA scrutinises the relationship between those terms and the liquidity profile of the stated investment strategy. A vehicle whose documents promise monthly liquidity but whose portfolio includes staked assets, locked DeFi positions, or OTC illiquid tokens will face a raised eyebrow from the regulator – and potentially an investor claim if the gate is exercised. In our cross-border practice, we have seen this mismatch arise most often in vehicles that migrated a pre-existing TradFi template into a crypto context without revisiting the liquidity assumptions.
The practical answer is to draft backward from the asset. If the fund targets large-cap, centrally exchange-traded tokens with deep spot markets, daily or weekly redemption with a short notice period is defensible. If the strategy includes staking, protocol locks, or illiquid Layer-2 positions, quarterly or semi-annual redemption windows – with a documented liquidity management policy – are the appropriate starting point. FINMA's supervisory approach under the collective-investment-schemes regime requires that the liquidity management policy be filed as part of the authorisation package, not merely referenced as a back-office procedure.
What is the Swiss regulatory basis for digital-asset fund structures?
Switzerland offers several structural vehicles for a digital-asset collective investment scheme, each carrying different redemption-design constraints. Under the Swiss collective-investment-schemes framework supervised by FINMA, the principal options are the contractual investment fund, the société d'investissement à capital variable (SICAV), and – for a single-investor or very small-investor base – the limited partnership for collective investment. Each requires FINMA authorisation where the vehicle is distributed to more than a small number of non-qualified investors, and each triggers the appointment of a FINMA-licensed fund management company and a FINMA-approved custodian bank or securities dealer acting as depositary.
For digital-asset strategies, the token taxonomy FINMA has published – distinguishing payment, utility, and asset tokens – matters for the fund's portfolio classification and therefore for how the investment guidelines and redemption terms must be written. An asset-token-heavy fund is treated differently from a pure payment-token vehicle. A fund holding tokens that FINMA classifies as securities-equivalent instruments must comply with the depositary and valuation requirements that apply to securities funds; those requirements directly constrain how NAV is calculated at each redemption and how settlement is effected. In our cross-border practice, we regularly advise managers on this classification exercise before the fund documents are drafted, because a reclassification after filing is expensive and time-consuming.
FINMA-licensed fund management companies must demonstrate adequate risk management, including liquidity stress-testing of the portfolio against the proposed redemption terms. This is not a box-ticking exercise: FINMA expects documented scenarios, not assurances.
For the manager who wants to appoint a third-party Swiss management company rather than license its own entity, the management company's own FINMA authorisation – and its risk appetite for the digital-asset strategy – becomes a constraint on the fund's terms. Not every licensed Swiss management company will take on a pure crypto mandate. This is a market reality we navigate routinely with clients expanding into Switzerland from other hubs.
How are redemption terms typically structured for a Swiss digital-asset fund?
Swiss fund practice draws on a mixture of the statutory collective-investment-schemes regime and contractual flexibility within the fund rules or articles. The redemption terms that are standard in a well-drafted Swiss digital-asset fund will address at minimum: the redemption frequency and dealing days, the notice period for redemption requests, the basis of NAV calculation and the pricing methodology for digital assets, the gate provision (expressed as a percentage of NAV or of the total value of outstanding units), side-pocket provisions for illiquid or suspended assets, in-kind redemption authority, and the suspension provisions that permit the fund management company to defer redemption in defined market conditions.
Gate provisions in Swiss digital-asset funds are typically drafted as a percentage of NAV on any single dealing day. If aggregate redemption requests exceed that threshold, redemption is pro-rated across requesting investors, with the balance carried to the next dealing day. This approach is broadly consistent with how leading fund domiciles – Jersey, Cayman, Luxembourg – structure gates, which matters for cross-border placement because institutional allocators who hold positions across multiple fund domiciles will benchmark one fund's terms against another's.
In-kind redemption – distributing the underlying tokens rather than cash – is permissible in a Swiss fund structure but requires express authority in the fund documents, investor consent mechanics, and careful treatment of any token that carries transfer restrictions (for example, a staked position that cannot be moved without an unbonding period). We regularly advise on the interaction between on-chain transfer mechanics and the fund's contractual redemption obligation; the two must be reconciled at the drafting stage, not after a redemption request has been submitted.
How do redemption terms interact with Swiss tax treatment and banking?
Redemption design in Switzerland does not exist in isolation from the tax and banking stack. The Swiss withholding-tax regime applies to income distributions from certain Swiss collective investment schemes; the characterisation of a redemption proceeds payment versus a distribution is therefore tax-relevant and must be addressed in the fund documents with input from Swiss tax counsel. Equally, the Swiss stamp duty position – which applies to certain securities transactions involving Swiss residents or Swiss-domiciled entities – turns on whether the interests in the fund are classified as securities for stamp purposes, a question that is asset- and structure-dependent.
For a fund targeting non-Swiss institutional investors, Switzerland's network of double-taxation agreements provides meaningful relief on income flows in many cases, but the relief is treaty-partner-specific and depends on the investor's jurisdiction of residence. A manager accepting investors from the EU, the Gulf, Singapore, and Hong Kong simultaneously will face a layered treaty analysis. In our cross-border practice, we map this at the term-sheet stage, before the fund documents are finalised, to avoid distributing a fund whose economics are materially less attractive than the model assumed.
Banking for a Swiss digital-asset fund is a distinct challenge. Swiss banking infrastructure has developed materially over the past several years, with a small number of banks having established digital-asset custody and clearing capability. The fund's redemption terms must be drafted to reflect the settlement timeline that the depositary bank can actually execute. A daily-redemption promise against a bank that settles digital-asset transactions on a T+2 cycle creates a structural tension. The fund rules should specify the settlement basis expressly; in our practice, we have seen omissions here cause investor disputes at the first redemption cycle.
What is the process and timeline for establishing a Swiss digital-asset fund?
The authorisation process for a Swiss collective investment scheme runs through FINMA's Asset Management department. The process begins with the appointment of a FINMA-licensed fund management company – either the manager's own Swiss subsidiary or a third-party management company – and proceeds to preparation of the fund documentation package, which includes the fund contract or articles, the investment guidelines, the liquidity management policy, the NAV valuation policy, and the depositary appointment. For a digital-asset fund, FINMA will examine each of these documents with particular attention to how digital assets are classified, valued, and made available for redemption.
Authorisation timelines vary depending on FINMA's queue and the complexity of the submission. We describe this qualitatively – the process is typically a matter of months, not weeks – and we plan the launch timeline accordingly. For a manager with a firm launch date, working backward from that date to the filing deadline is the first structural discipline we apply. Rushing the filing invariably generates FINMA queries that add time at the back end; a clean, complete filing shortens the review cycle.
The practical steps, in sequence, are: structural decision on vehicle type and domicile rationale; engagement of FINMA-licensed management company; preparation and internal review of fund documents; pre-filing dialogue with FINMA where appropriate; submission; FINMA review and query round; authorisation; launch mechanics including depositary onboarding and investor subscription documentation. Each step has dependencies; the longest critical path is typically the depositary onboarding, because Swiss banks with digital-asset capability run their own due-diligence processes independently of FINMA's timeline.
CTA #1 — For a manager working toward a Swiss fund launch: The process above describes the standard path. Your facts – the entity, the investor base, the asset mix, the banking relationship – change the analysis at every step. For a scoped assessment of your structure before you commit, contact OBOLUS at info@oboluslaw.com.
Which manager profile should consider Switzerland, and which should not?
Switzerland is not the default answer for every digital-asset fund. The choice of domicile turns on a matrix of investor base, asset classification, regulatory risk appetite, and the cost of ongoing compliance. The following profiles reflect how we advise at the decision point.
Profile A – Institutional manager with a diversified digital-asset portfolio, Swiss or European institutional investor base. Switzerland is a strong fit. The FINMA regime carries credibility with institutional allocators, the treaty network is broad, and the contractual fund structure gives material flexibility on redemption design. The timeline and cost of authorisation are material but manageable at institutional scale. Key risk: depositary selection, which narrows the field and affects the settlement terms you can offer.
Profile B – Emerging manager, primarily retail or semi-professional investor base, small initial AUM. Switzerland is likely over-engineered for this profile. The authorisation cost and ongoing compliance burden require a minimum scale to be economic. A manager in this position should consider whether a Cayman or BVI vehicle – with a Swiss distribution arrangement where needed – better matches the economics. The AUDIENCE_MYTH here is real: no offshore vehicle is universally appropriate, but the appropriate vehicle for a small emerging manager is not usually a FINMA-authorised fund.
Profile C – Single-strategy manager, pure liquid tokens (large-cap, exchange-traded), performance-fee model, institutional LP base. Switzerland is competitive with Cayman on terms flexibility and materially better on European distribution optionality. The key design question is whether the manager wants a FINMA-authorised vehicle or a FINMA-notified foreign fund distributed into Switzerland. The latter is a lighter-touch process but does not carry the FINMA brand; for some institutional investors, the distinction matters.
A redemption dispute resolved through structural amendment
In a recent matter, an asset manager had launched a Swiss contractual fund with monthly redemption terms drafted against a template that had not been updated to reflect the fund's actual token mix, which included a meaningful allocation to staked assets with multi-week unbonding periods. When a cluster of investors sought redemption simultaneously, the fund management company gated – as it was entitled to do – but the gate triggered investor complaints premised on the mismatch between the stated monthly liquidity and the operational reality. We were engaged to review the fund documentation, the management company's liquidity management policy, and the depositary's settlement procedures. The outcome was a documented amendment to the fund rules, approved by FINMA, that aligned the redemption frequency with the portfolio's actual liquidity profile, and a revised liquidity management policy that provided investors with a clearer disclosure of gating triggers. The matter resolved without formal proceedings.
A common assumption about Swiss fund structures that causes problems
A common assumption is that a Swiss fund's redemption terms can simply track the redemption terms of the manager's existing Cayman vehicle, with only the statutory references updated. This assumption is wrong in ways that are expensive to correct after authorisation. The Swiss regime imposes specific requirements on liquidity management documentation, NAV valuation methodology for digital assets, and depositary settlement that are not replicated in a standard Cayman fund contract. More fundamentally, the FINMA authorisation process is an opportunity to stress-test the fund's redemption design against the actual portfolio; managers who treat it as a filing formality miss that opportunity and create the conditions for the kind of dispute described above.
A second assumption – common among managers coming from a DeFi or token-issuer background – is that on-chain programmable redemption mechanics can substitute for contractual fund documentation. They cannot. FINMA operates in the legal domain; the fund's rights and obligations are established by the fund contract and the applicable statutory regime, not by smart-contract code. On-chain mechanics can complement the fund's operational process, but they do not replace it. We have advised on how to integrate on-chain transfer functionality within a compliant FINMA-authorised structure; the integration requires careful legal mapping of the on-chain event to the contractual obligation, and it is not a plug-and-play exercise.
CTA #2 — For a manager who has already filed or launched and is facing a structural issue: If a prior application stalled, a depositary declined to onboard, or a redemption gate has generated investor correspondence, a second read of the fund documents and the FINMA submission can surface the structural reason and the route forward. Write to OBOLUS at info@oboluslaw.com.
Self-assessment: is your Swiss digital-asset fund structure sound?
Before engaging counsel or filing with FINMA, a manager can run through the following questions to identify the highest-risk gaps in the proposed structure.
- Have you classified each token in the portfolio under FINMA's token taxonomy, and does the classification affect your depositary and valuation obligations?
- Do your proposed redemption terms – frequency, notice period, gate threshold – match the actual liquidity profile of each asset class in the portfolio, including any staking or lock-up periods?
- Has your depositary confirmed its operational capability to settle redemptions within the timeframe your fund documents promise?
- Is your NAV valuation methodology for digital assets documented at the level of detail FINMA expects, including the pricing source hierarchy and the procedure for valuing illiquid or suspended assets?
- Have you mapped the withholding-tax and stamp-duty position for each investor jurisdiction in your target LP base?
- If you are using a third-party fund management company, have you confirmed its risk appetite for your specific strategy and its willingness to sign the FINMA submission as management company?
- Is your side-pocket authority – if you want it – expressly included in the fund contract, with the investor consent mechanics defined?
A "no" or "not yet" on any of these is a signal that structural work is needed before filing. In our experience, each unresolved item adds time to the FINMA review cycle and risk to the launch timeline.
Related at OBOLUS
- Digital-asset funds and investment vehicles – licensing, structuring and domicile advice for fund managers across jurisdictions.
- Alternative Investment Funds for digital assets in Jersey – how Jersey's AIF regime compares for an inbound digital-asset manager.
- MLRO and compliance officer function in Germany (BaFin) – AML compliance requirements for digital-asset businesses operating in or into Germany.
FAQ
Where should a crypto fund be domiciled?
The right domicile depends on the investor base, the asset mix, and the redemption profile – not on a default assumption. Switzerland suits institutional strategies with a European or Swiss LP base and a need for FINMA credibility. Cayman and BVI remain efficient for smaller or emerging managers, or for strategies primarily distributed outside Europe. Jersey and Luxembourg are strong for EU-distribution optionality. Matching domicile to investor base, asset mix, and redemption design at the term-sheet stage avoids costly restructuring later.
Does a digital-asset fund manager need a licence?
In Switzerland, managing a collective investment scheme on behalf of third parties requires either a FINMA licence as a fund management company or the appointment of a FINMA-licensed third-party management company. A manager advising a self-managed vehicle – depending on structure and investor count – may also trigger FINMA authorisation requirements under the financial-institutions regime. The applicable threshold and licence category depend on the vehicle type, the number of investors, and whether the fund is distributed publicly or to qualified investors only.
How is custody arranged for a crypto fund?
A FINMA-authorised Swiss fund must appoint a FINMA-approved depositary – typically a bank or securities dealer with custody capability for the fund's asset class. For digital-asset funds, the depositary must be able to hold or sub-custody the relevant tokens, maintain segregated records, and support the NAV calculation and redemption settlement process. A small number of Swiss banks have developed this capability. The depositary's own due-diligence process runs independently of FINMA's authorisation timeline and is often the longest operational dependency in a fund launch.
OBOLUS is an independent digital-asset law boutique acting only for businesses. We advise exchanges, custodians, token issuers and funds on licensing across 70+ jurisdictions, on disputes and on-chain asset recovery across 25+ forums, and on the tax, banking and compliance that sit around them. Digital assets are the entirety of our practice, and we act only for businesses. We match domicile to investor base, asset mix, and redemption profile – and that specificity is the difference between a structure that works and one that creates problems at the first redemption cycle. To discuss your situation, contact info@oboluslaw.com.
By Lydia Brennan, Tax & Structuring Analyst – specialising in fund domicile selection, cross-border tax structuring, and redemption design for digital-asset investment vehicles in Switzerland and across the leading fund jurisdictions.
This publication is general information about the law and does not constitute legal advice. It is not a substitute for advice tailored to your circumstances. OBOLUS accepts no liability for action taken or not taken on the basis of this material. For advice on your situation, contact info@oboluslaw.com.