Digital assets, including cryptocurrencies and tokenized „traditional“ financial assets, are playing an increasingly significant role in financial markets. While the Swiss Bankers Association’s Portfolio Management Guidelines (Guidelines) remain a key reference standard for discretionary asset management, they were developed without consideration for these emerging investment options, raising questions about their compatibility with the framework. This article examines whether cryptocurrencies and tokenized assets can be integrated into portfolios managed under these Guidelines and explores whether a regulatory reassessment may be warranted in light of the evolving investment landscape.
1) Introduction
The Swiss Bankers Association’s Portfolio Management Guidelines (the Guidelines) have long served as a key reference for portfolio management practices in Switzerland. Initially introduced as a form of mandatory self-regulation, they have since evolved into a best-practice framework, particularly following the enactment of the Financial Services Act (FinSA). Despite their continued relevance, the Guidelines were developed at a time when digital assets – such as cryptocurrencies and tokenized securities – were not yet part of the financial landscape. Last revised in 2020, the Guidelines do not mention digital assets, leaving open questions about their compatibility with the Guidelines. The point is noteworthy, because banks will in principle be required to apply the Guidelines when managing portfolios of private clients.
This article examines whether banks applying the Guidelines can integrate digital assets into client portfolios. Specifically, it explores the treatment of (i) cryptocurrencies such as Bitcoin and Ether as investments, (ii) traditional financial assets in tokenized form, and (iii) the use of cryptocurrencies as a means of payment in portfolio transactions. In doing so, we seek to examine whether the Guidelines remain aligned with market developments or if their adaptation may be necessary to reflect the evolving role of digital assets in portfolio management.
2) Cryptocurrencies as investments
a) Have cryptocurrencies become an asset class?
In just over a decade, cryptocurrencies have grown from a niche concept to a market capitalization exceeding USD 3.2 trillion. Daily trading volumes often surpass those of traditional commodities like gold or oil, underscoring their increasing financial relevance.
Investor behavior also signals a shift: research suggests that many cryptocurrency owners adopt longer-term positions, treating these assets as investment opportunities, rather than mere payment means or transactional tools. Whether cryptocurrencies constitute a distinct asset class remains a subject of debate, particularly regarding valuation models, correlation with traditional assets, and hedging potential. While further research is needed, their growing role suggests that they may offer diversification benefits, possibly even for traditionally conservative investors.
This raises the question of whether portfolios managed under the Guidelines could include cryptocurrency investments.
b) Are cryptocurrencies permissible investments under the Guidelines?
The legal nature of cryptocurrencies is a hotly debated question, and one which may not have a uniform response depending on the features and structure of the relevant tokens. That said, determining their eligibility under the Guidelines does not hinge on their legal nature. The Guidelines indeed adopt an economic approach, assessing investments based on their inherent risk exposure rather than their legal form.
For our purposes, we distinguish cryptocurrencies from tokenized traditional assets, which are essentially traditional investments recorded on a distributed ledger (see below at 3)). When referring to „cryptocurrencies“ we focus on Bitcoin, Ether and digital tokens recorded on a distributed ledger that have similar functions and use.
i) Common bank investment instruments vs alternative instruments
Since their 2020 revision, the Guidelines have adopted a principle/exception framework regarding the scope of permitted investments. The overarching principle is flexibility, allowing investments across assets types, as needed to achieve the agreed-upon strategy. Article 4 explicitly states that „the bank may invest the client’s portfolio in any asset class, investment instrument, and associated investment techniques required to achieve the investment objective.” Comment n°12 further clarifies that this includes, but is (importantly) not limited to, financial instruments and securities as defined under article 3(a) and (b) FinSA. However, this broad discretion is subject to the specific restrictions outlined in comments n°13 to 16 and article 6 of the Guidelines, which ultimately define the boundaries of permissible investments.
To fully understand the approach underpinning the Guidelines, it is useful to consider how it was framed in previous versions of the text, before the 2020 revision. Historically, the Guidelines have somewhat aligned with the vision presiding under Swiss pension funds regulation, particularly the Occupational Pension Schemes Act and its implementing ordinances (specifically OPP 2 / BVV 2). Leaving aside the specific rules applicable to base metals and commodities, the Guidelines used to explicitly categorize investments into two groups: „common bank investment instruments” and „alternative instruments”. Although the current Guidelines no longer refer to „common bank investment instruments”, the notion remains relevant. Under the Guidelines, common bank investments are permitted provided they are readily marketable, whereas investments in alternative instruments, their derivatives and combinations, are admissible only for purposes of portfolio diversification and provided that they (i) are readily marketable and (ii) are either structured according to the „fund-of-funds” principle, follow a „multi-manager” approach or guarantee an equivalent degree of diversification.
Whether an investment qualifies as common or alternative is determined based on its risk profile. Examples given in (former versions of) the Guidelines and the OPP 2 / BVV 2 can serve as guidance. Financial instruments such as stocks, bonds, notes and certain first-rate derivatives are typically considered traditional. By contrast, private equity investments, hedge funds and non-standardized derivatives do not fall within the scope of common bank investment instruments. Typically, alternative investments are characterized by high volatility, illiquidity, or even leverage exposure, which diverge from the principles underlying traditional placements – namely, investment security, reasonable returns, appropriate risk diversification, and some level of liquidity.
Through strict diversification, liquidity, and marketability requirements (as set out in comment n°15 and article 6), the Guidelines essentially take the position that the risks associated with alternative investments can only be mitigated if exposure occurs indirectly, through a diversified product or fund. Furthermore, such investments must serve solely as a portfolio diversification tool, which is generally understood to mean that alternative investments, as a category, should not exceed 15% of a portfolio — a threshold aligned with article 55(d) OPP 2. This limit is now further supplemented by the thresholds set out in FINMA Circular 2025/2, which impose a 10% cap per individual instrument and a 20% limit per issuer.
ii) Cryptocurrencies as alternative investments under the Guidelines
While the situation could change with time if cryptocurrencies become more common in investor portfolios, there is little doubt that cryptocurrencies cannot be considered today as being common bank investments. As a consequence, direct investments in cryptocurrencies are not permissible under the Guidelines, even if only for portfolio diversification purposes. Exposure to cryptocurrencies can only be achieved via an indirect investment meeting the requirements of comment n°15 of the Guidelines, as well as the readily marketable requirement of article 6 of the Guidelines.
In practice, these requirements significantly limit the ability to gain exposure to cryptocurrencies within a Guidelines-aligned portfolio. While the ready marketability requirement is generally not a hurdle (see also 3)c) on this point), the product diversification condition set out in comment n°15 of the Guidelines drastically narrows the investment universe as far as cryptocurrencies are concerned. This requirement entails achieving diversification through either a fund-of-funds structure, a multi-manager (or multi-compartment) setup, or an equivalent approach — something that, as a rule, necessitates a product with diverse components whose returns and risks are driven by different underlying factors.
Fund-of-funds structures that offer crypto exposure remain rare and are typically not cost-efficient. Multi-manager products or multi-compartment vehicles do exist, but they are relatively niche and seldom focus exclusively on cryptocurrencies. The most accessible products, such as actively managed certificates or cryptocurrency ETFs, often fail to meet the required level of product diversification, because they focus on a single cryptocurrency, or on cryptocurrencies that are correlated with each other. That said, it is not excluded that a fund or certificate invested in multiple baskets of cryptocurrencies could achieve a sufficiently diversified profile.
It must be acknowledged that the current framework makes gaining exposure to cryptocurrencies as investments within a Guidelines-aligned portfolio extremely difficult. Naturally, expanding investment possibilities to include direct cryptocurrency holdings or indirect exposure via derivatives, structured products, or funds that do not strictly align with the product diversification requirements of the Guidelines remains feasible through specific agreements with clients. However, given the growing role of cryptocurrencies, one may question whether the Guidelines, in their current form, truly fulfill their core objective: enabling limited exposure to a full spectrum of alternative assets while maintaining a diversified risk profile.
3) Tokenized traditional assets under the Guidelines
a) Locating tokenized traditional assets in the Guidelines
The use of the distributed ledger technology in financial markets is obviously not constrained to cryptocurrencies. Although the latter still represent the largest trading volumes, the laws of several jurisdictions – including Switzerland – already make it possible to use distributed ledgers to record the ownership of traditional financial instruments, such as stocks, bonds and derivatives. Under Swiss law, the process (commonly referred to as “tokenization”) does not involve the creation of a new asset: a tokenized share remains a share, and the digital representation of the share is not a separate asset but a way to record its ownership, similar to the role of a paper certificate.
As noted above, pursuant to article 4 of the Guidelines, when managing portfolios, banks may make „common bank investments”, a category that includes a wide range of instruments. In this regard, the focus of the Guidelines is on the financial effects of adding instruments in a portfolio, rather than how the relevant instruments are represented. The Guidelines therefore do not impose specific provisions based on whether an asset is tokenized, such that a tokenized version of a traditional financial instrument can qualify as a common bank investment instrument depending on its characteristics.
Tokenized traditional assets however introduce a challenge that is less common with non-tokenized assets: the increasingly blurred boundary between private and public markets. Taking equity securities as an example, it is easy to identify that a transaction involving shares held in paper form and put in escrow pursuant to a complex shareholder agreement is a private equity deal and thus an alternative investment. However, the classification becomes less straightforward when a mid-sized company issues freely tradable tokenized shares, which are then transacted over-the-counter via an organized trading facility. To address such situations, banks cannot rely solely on surface-level characteristics to determine whether an asset qualifies as a common bank investment or an alternative investment. Instead, they must conduct a more nuanced assessment, taking into account factors such as the extent of public disclosure regarding the issuer and its securities, as well as the number and nature of investors involved.
b) Indirect investments in tokenized traditional assets
When managing a portfolio, a bank may also consider indirectly investing in tokenized traditional assets. Specifically, a bank may consider investing in (a) a fund investing in these assets, or (b) derivatives with tokenized traditional assets as their underlying asset. Such indirect investments would be subject to the same restrictions as indirect investments in assets that are not tokenized.
c) Marketability
Even if there is no general restriction applying to tokenized traditional financial assets, a specific instrument may be included in a portfolio only if it complies with article 6 of the Guidelines, i.e. if the instrument is „readily marketable”. Per comment n°18, an instrument is deemed readily marketable if there is a representative market for it (whether on-exchange or off-exchange), if the issuer or a bank commits to provide liquidity, or if the instrument is redeemable at regular intervals.
It is possible for tokenized traditional assets to meet these criteria. The fact that an asset is represented by a digital token on a distributed ledger does not prevent the asset from being traded on a market, for example. Since the market in question does not need to be a stock exchange, an organized trading facility admitting tokenized assets may satisfy this requirement. With respect to the other criteria, the issuer of a tokenized asset can commit to act as market maker, and it is possible that a tokenized asset would be redeemable.
4) Cryptocurrencies as payment means
a) Use of cryptocurrencies as payment means in portfolio management
Cryptocurrencies can be viewed as potential investments, but they may also be used as means of payment. In the context of portfolio management, there would be several ways to use cryptocurrencies as means of payment: (i) to pay blockchain fees, (ii) to acquire assets tradable in cryptocurrencies or to receive proceeds from the sale of such assets, and (ii) as a reference currency of the mandate.
When trading tokenized traditional assets, investors may need to pay certain fees to execute those transactions. These may include brokerage fees and trading venue fees, but also blockchain fees, i.e. fees that need to be paid for the transaction to be validated on the relevant distributed ledger (such as „gas“ fees on the Ethereum blockchain). These blockchain fees usually need to be paid in the native token of the relevant blockchain (e.g. Ether for the Ethereum blockchain). In these circumstances, it would make sense for clients to hold in their portfolio a small quantity of the relevant tokens to pay for these fees. In this case, cryptocurrencies would not be used as investments, but as payment means.
Investors trading tokenized assets may also encounter situations in which the purchase price of an asset (or the proceeds from its sale) is paid in cryptocurrencies. In such cases, investors will generally hold, for a very short time, the relevant cryptocurrencies pending execution of the transaction (in the case of an acquisition) or conversion into the reference currency (in the case of a sale).
Lastly, one may theoretically consider a portfolio management where the reference currency would be a cryptocurrency. At present, this hypothesis seems rather remote, at least for a mandate under the Guidelines, and we have refrained from examining it further.
b) Cash and managed accounts under the Guidelines
The Guidelines focus on investments that banks may make on behalf of their managed clients. A traditional wealth management portfolio is however seldom fully invested. There will typically be a portion (e.g. 5%) of the portfolio that is held in cash, normally in the reference currency of the portfolio. The reference currency would generally be expected to be the currency in which the investor pays the majority of its expenses, or the currency in which the investor makes the most investments.
The reference currency is not the only currency that a bank may hold in the context of a portfolio management agreement. When an investment is made in an asset traded in a different currency (e.g. an equity security traded in US dollars if the reference currency is the Swiss franc), the bank will usually purchase the relevant currency to execute the transaction. During a very short time, the client will therefore hold cash in a currency that is not the reference currency. Further, securities denominated in a currency that is not the reference currency may also pay dividends or coupons, for example. Even if they are later converted into the reference currency, the relevant amounts will typically accrue to the client and be held – albeit temporarily – on the account.
The Guidelines do not set limits nor provide guidance on the use of cash in portfolios (and these would typically be set as part of the investment strategy agreed upon with the client). More specifically, the Guidelines (a) do not indicate how the reference currency should be selected, (b) do not prescribe a minimum or maximum portion of the portfolio that must remain in cash, and (c) do not address what should be done with cash in foreign currencies that is received as part of dividends or coupon payments.
c) Cryptocurrencies as payment means under the Guidelines
In our view, there is nothing in the Guidelines that would prevent banks from using cryptocurrencies as payment means when managing portfolios. Regardless of whether the relevant cryptocurrencies are to be considered as common bank investments instruments, a bank may therefore cause clients to hold cryptocurrencies to pay for blockchain fees, or even to pay for cryptocurrency-denominated assets. It would also be possible to cause clients to receive distributions, such as coupon payments and dividends, in cryptocurrencies.
The use of cryptocurrencies as means of payment should however remain compatible with cryptocurrencies being actually used as such. In other words, such cryptocurrency positions held for payment purposes should not be used to circumvent limitations on holding cryptocurrencies as investments. Generally, this will mean reducing the cryptocurrency position to the minimum required to achieve the relevant goals and converting distributions in the reference currency.
4) Conclusion
The Guidelines, while a cornerstone of portfolio management in Switzerland, were designed in a financial landscape that did not anticipate the rise of digital assets. As a result, their application to cryptocurrencies and tokenized assets requires careful interpretation.
Our analysis suggests that not all digital assets are treated equally under the Guidelines. While tokenized traditional assets generally fit within the existing framework, cryptocurrencies as investments face significant hurdles. Classified as alternative investments, they are subject to strict diversification and structuring requirements that, in practice, severely limit placement options. Yet, cryptocurrencies differ fundamentally from traditional alternative investments: concerns about liquidity and marketability – central to the Guidelines – have diminished with the rise of trading platforms. Instead, the most pressing risks stem from volatility, legal uncertainties, reputational exposure, and cybersecurity threats, including hacking and fraud.
Beyond their role as investments, cryptocurrencies can serve as a means of payment. Their use for blockchain fees, asset purchases, or distributions within managed portfolios appears permissible under the Guidelines, provided holdings are strictly limited to transactional purposes and not used to bypass investment restrictions.
While banks can structure agreements with clients to facilitate exposure more broadly, the increasing role of digital assets in financial markets may warrant a broader reassessment of the Guidelines. A precedent exists: in 2008, the Guidelines revision introduced greater flexibility for investments in base metals and commodities in response to market developments. As cryptocurrency adoption grows, it remains to be seen whether similar adjustments can be made to ensure the Guidelines remain relevant in an evolving investment landscape.
Valérie Menoud (valerie.menoud@lenzstaehelin.com)
Ariel Ben Hattar (ariel.benhattar@lenzstaehelin.com)