FINMA Orders Closure of Crypto Bank FlowBank, Begins Liquidation
Swiss financial watchdog, Financial Market Supervisory Authority (FINMA) closed FlowBank and declared it bankrupt. This comes after FlowBank was reported to be undercapitalised and deeply in debt. Deposits up to 100,000 Swiss Francs are guaranteed, but the status of crypto assets is still unclear.
FlowBank Closed by Swiss Regulator FINMA
flow BankAn online Swiss bank active in the crypto space has been shut down by Switzerland’s FINMA. This occurs in an environment where the bank is found to have insufficient capital to support its operations. FINMA stated that FlowBank had violated minimum capital requirements to a very high degree and in a gross manner. There are also some valid concerns about the bank’s current high level of indebtedness. Therefore, FINMA does not expect changes in the bank’s structure in the near future.
FlowBank stated in the letter to its customers published on the bank’s current website that it received approval from FINMA. All bank web pages are automatically redirected to this announcement. Switzerland-based law firm Walder Wyss has been appointed as insolvency liquidator. This is a convenient way to deal with bank closure and meet customer needs.
FlowBank was founded in 2020 and is a contemporary bank with strong connections to the crypto industry. in 2021 CoinSharesIt purchased a 9% stake in FlowBank, a crypto asset manager, for $11.8 million. This investment allowed FlowBank to offer its customers the ability to buy, sell and hold cryptocurrencies and other tokenized assets through their accounts. This integration has made FlowBank stand out as one of the leading banks in the crypto banking industry.
Announced in the first quarter of the year BinanceThe world’s leading cryptocurrency exchange will allow some institutional customers to store their digital assets in FlowBank. This partnership revealed that FlowBank has a strong presence in the crypto market. But the closure has implications for the future of such partnerships and the overall impact on crypto-friendly banks.
Fate of Crypto Deposits Uncertain After Bank Closing
FINMA’s announcement brought some relief to FlowBank’s traditional depositor customers. People with up to 100,000 Swiss francs in their accounts will be able to get their money back within a week. But the future of customers’ cryptocurrency deposits is less clear. According to FINMA, it is the liquidator’s responsibility to determine whether these cryptocurrencies are trust assets or claims in the bank.
The distinction is very important. If classified as custodial assets, cryptocurrencies would be treated like securities in bankruptcy, which could provide better protection for crypto holders. On the other hand, recovery of these assets may be more complicated if they are treated as receivables from the bank. This uncertainty is a major concern for customers utilizing FlowBank’s crypto services.
FlowBank’s closure comes amid changes in FINMA’s leadership. Earlier this year FINMA appointed Stefan Walter, a former administrator. European Central Bank The (ECB) president has been appointed as the new CEO, effective from 1 April 2024. This decision follows the resignation of previous CEO Urban Angehrn, who left last year for health reasons. The leadership change at FINMA signals a potentially new regulatory approach in the Swiss financial sector.
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Maxwell is a crypto-economic analyst and Blockchain enthusiast who is passionate about helping people understand the potential of decentralized technology. I write extensively on topics like blockchain, cryptocurrency, tokens, and more for many publications. My goal is to spread knowledge about this revolutionary technology and its effects on economic freedom and social well-being.
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