Switzerland cleared the way Friday for more trading of bitcoin and other digital assets in the country by authorizing a new digital stock exchange.

Stock exchange SIX said its new SIX Digital Exchange, or SDX, will let investors, via regulated institutions, trade, settle and store digital tokens through one venue, underpinned by “the highest Swiss standards of oversight and regulation.” Financial regulation around cryptocurrencies and digital assets is a hodgepodge globally, with some countries welcoming the upstart industry and others seeking to ban it.

Many of the largest crypto exchanges are largely unregulated, such as Binance, which in recent weeks was barred in some countries from offering certain investments. Some exchanges have tried to work within the purview of regulators, hoping that official approvals would boost trust and legitimacy among investors in the booming sector.

Switzerland has long sought to be a hub for products and markets developing around cryptocurrencies and other digital assets. Some of its banks offer bitcoin trading and custody, and a section of the country dubbed Crypto Valley is a hub for crypto-finance companies and startups.

The Swiss regulator, Finma, said it granted SIX two licenses, as a stock exchange and central securities depository. The licenses let it open up its infrastructure to supervised financial institutions, rather than directly to end clients, Finma said, which had been an option.

Finma said it had to balance innovation with market safety, and that now “a closely-knit value chain ranging from issuance and trading through to the settlement and custody of tokenized assets has been facilitated.”

The new Swiss digital exchange uses distributed ledger technology to record transactions.

Thomas Zeeb, head of securities and exchanges at SIX, said products on the exchange could come to include nonfungible tokens, also known as NFTs, tied to assets such as art and wine.

SIX has been working on the digital exchange since 2018. Executives involved in the project have said they see Swiss approval as a stepping stone to creating a global network of digital asset trading. SIX is also working on a similar platform in Singapore.

SIX didn’t say when SDX will launch in Switzerland, but executives have said it was ready to go as soon as the Finma approvals were in.

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Write to Margot Patrick at margot.patrick@wsj.com