The Swiss Financial Market Supervisory Authority (FINMA) has shut down FlowBank, an online Swiss bank known for offering customers exposure to cryptocurrency, citing severe breaches of minimum capital requirements. The regulator announced on Thursday that bank lacked sufficient capital to operate as a bank and faced well-founded concerns of over-indebtedness with no prospect of restructuring.
FlowBank’s Closure and Bankruptcy Process
FINMA’s decision to shutter FlowBank was made public in a letter to customers posted on the bank’s website. According to FINMA, FlowBank had “significantly and seriously breached” minimum capital requirements. The Swiss regulator has appointed top Swiss law firm Walder Wyss as bankruptcy liquidators to oversee the process.
FlowBank, established in 2020, had extensive connections to the cryptocurrency sector. In 2021, crypto asset manager CoinShares purchased a 9% stake in the bank for $11.8 million, following which FlowBank began allowing its customers to buy, sell, and hold crypto and other tokenized assets directly through their accounts. Earlier this year, it was reported that Binance, the world’s largest crypto exchange, would enable larger traders to hold their crypto assets at FlowBank or Sygnum, another crypto-friendly Swiss bank.
Customer Deposits and Crypto Holdings
According to a document posted on FINMA’s website, FlowBank customers with deposits up to 100,000 Swiss francs (approximately $111,710) are considered protected and will receive their money back within seven working days. However, the future of customers’ cryptocurrency deposits remains uncertain. FINMA stated that it is up to the liquidator to determine whether cryptocurrencies are classified as custody assets, to be treated like securities, or as claims on the bank during the bankruptcy process.
FlowBank’s Communication Shutdown
FlowBank has not provided a comment on the shutdown. All web pages for the bank now direct users to the letter informing clients about the closure. Additionally, FlowBank’s Twitter account has been deactivated.
The closure of FlowBank highlights the ongoing challenges faced by financial institutions venturing into the volatile cryptocurrency market. As the bankruptcy process unfolds, the treatment of crypto assets and the impact on customers will be closely monitored by the financial community.
