As an analyst with a background in finance and experience in the crypto industry, I find the news of FlowBank’s bankruptcy and subsequent closure by FINMA to be troubling. The Swiss Financial Market Supervisory Authority’s decision to shutter the online bank due to insufficient capital and significant breaches of minimum capital requirements comes as a surprise, given FlowBank’s ties to reputable industry players like CoinShares and Binance.
As a researcher studying the finance industry, I came across the news that FlowBank, a Swiss online bank providing access to cryptocurrencies for its clients, was recently forced into bankruptcy by the country’s financial regulatory authority.
The Swiss Financial Market Supervisory Authority (FINMA) made the announcement on Thursday that they would be closing FlowBank due to insufficient capital for its banking activities. The authority expressed concerns that minimum capital requirements had been severely violated, and there were solid reasons to believe that the bank was heavily in debt with no possibility of restructuring.
In a customer notice published on FlowBank’s website, the bank announced that FINMA made the decision to close it down on the previous day. The esteemed Swiss law firm Walder Wyss has been designated by FINMA to manage the bank’s assets in liquidation proceedings.
In 2020, FlowBank made its debut with significant connections to the cryptocurrency sector. Notably, it was partially owned by crypto asset manager CoinShares. In the following year, CoinShares acquired a 9% stake in FlowBank for $11.8 million. Following this investment, FlowBank enabled its clients to buy, sell, and keep crypto and other tokenized assets within their FlowBank accounts.
This year, news emerged that Binance, the leading cryptocurrency exchange globally, announced plans for bigger traders to keep their digital assets with FlowBank or Sygnum, two reputable Swiss banks supportive of cryptocurrencies.
As an analyst, I’ve examined a document published on FINMA’s website. According to the information disclosed, FlowBank clients holding deposits amounting to a maximum of CHF 100,000 (approximately $111,710) are classified as having protected funds. Consequently, these clients can expect to recover their deposited amounts within a week, specifically seven working days.
The fate of customers’ crypto holdings remains uncertain. According to FINMA, it is the responsibility of the liquidator to determine whether these digital currencies are considered custody assets, subjected to securities treatment in bankruptcy proceedings, or simply “claims against the bank.”
FlowBank failed to respond for comment. All of its website pages now display messages notifying clients about the bank’s closure. Additionally, the bank’s Twitter account is no longer active.
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2024-06-13 18:15