Open a Hedge Fund in Switzerland

Switzerland is widely recognized as a key market for the formation and registration of offshore hedge funds. In parallel, the country also serves as an active hub for the distribution of foreign hedge funds, thanks to its strong and stable legal framework. This regulatory environment is shaped by various laws and regulations that govern the registration, distribution, and operational scope of hedge funds.

The Financial Institutions Act (FinIA) is another key piece of legislation that governs the activities of financial institutions, including hedge funds, in Switzerland. This law ensures that financial institutions operate in a manner that is consistent with the high standards of transparency, security, and regulatory oversight that Switzerland is known for.

Those who plan to start an investment business in Switzerland should be aware that the Collective Investment Schemes Act (CISA) is the main legal framework governing hedge funds. Our local Swiss company formation consultants offer expert support and guidance on the specific obligations and rights that arise from CISA.

In 2015, the Swiss Financial Market Supervisory Authority (FINMA) introduced a new regulatory framework that significantly impacted hedge funds operating in Switzerland. With updates to the Collective Investment Schemes Act (CISA), hedge funds became subject to direct oversight by FINMA, with more responsibilities for fund representatives.

One of the key requirements for foreign hedge funds distributing in Switzerland is the appointment of a Swiss legal representative and a paying agent, except in certain exempted scenarios:

These updates were enacted following Switzerland's cooperation agreement with the European Union (EU), which harmonizes standards for alternative investment fund operations.

One important consideration for hedge funds operating in Switzerland is taxes in Switzerland. The country offers a favorable tax environment, with relatively low corporate tax rates and numerous tax treaties to minimize double taxation. However, hedge funds must adhere to Swiss tax obligations, including those related to capital gains, withholding taxes, and reporting requirements.This agreement aligned Swiss hedge fund regulations with European norms, ensuring better transparency and investor protection.

If you're planning to distribute a hedge fund in Switzerland, our team of Swiss incorporation and regulatory experts can help determine whether your fund qualifies for exemption or must comply with full FINMA requirements.

The rapid growth of cryptocurrency markets has led to the establishment of numerous crypto hedge funds, and Switzerland is among the leading jurisdictions supporting this trend. Thanks to its innovation-friendly regulatory environment and strong fintech sector, the country has become a preferred destination for launching such vehicles.

The year 2017 marked a milestone in the global rise of crypto investment funds. In some cases, hedge funds may face company liquidation in Switzerland if they fail to meet operational or financial standards. The liquidation process must adhere to Swiss legal procedures, which involve notifying the Swiss Commercial Register, settling liabilities, and distributing remaining assets to shareholders. Understanding this process is crucial for hedge fund managers who are planning their exit strategies or dealing with insolvency.That year, over 120 cryptocurrency hedge funds were launched worldwide, with Switzerland seeing the registration of its first regulated crypto hedge fund, approved by FINMA

Setting up a cryptocurrency hedge fund in Switzerland requires careful planning due to the increased scrutiny of digital asset activities, especially regarding anti-money laundering (AML) rules and investor qualification. However, once authorized, these vehicles enjoy access to a well-established financial market and high-net-worth clientele.

The first regulated cryptocurrency hedge fund in Switzerland, the Cryptocurrency Fund, was launched in Zug in mid-2017 — a region globally known as Crypto Valley. The fund was designed for qualified investors, in line with Swiss regulatory standards.

Switzerland has become an increasingly popular destination for investing in Switzerland, especially in emerging sectors like cryptocurrencies. With a stable economy, robust legal frameworks, and favorable tax policies, Switzerland provides a safe and attractive environment for both local and international investors seeking diversified investment opportunities.

Increased investor interest has driven the rise of crypto hedge funds, correlating with the price surge of Bitcoin and other digital currencies. For instance:

• In early 2017, Bitcoin was valued below CHF 2,000;
• By December 2017, it had skyrocketed to approximately CHF 18,000.

Investors interested in Swiss crypto hedge funds must comply with FINMA's investor classification, and often require onboarding via regulated intermediaries. Our legal team provides personalized assistance to ensure both fund managers and investors meet all eligibility and compliance standards.