Switzerland’s financial regulator, the Swiss Financial Market Supervisory Authority (FINMA), has ordered FlowBank to cease operations and undergo bankruptcy proceedings due to severe breaches of minimum capital requirements. FlowBank is an online Swiss bank with ties to the cryptocurrency market.
FlowBank, established in 2020, partially owned CoinShares, a crypto asset manager. CoinShares acquired a 9% stake in FlowBank for $11.8 million in 2021, facilitating FlowBank’s expansion into offering crypto-related services directly from customer accounts.
In its statement, FINMA cited FlowBank’s failure to maintain sufficient capital for its banking activities, leading to concerns of over-indebtedness with no viable prospects for restructuring. The regulatory body appointed Walder Wyss, a prominent Swiss law firm, as bankruptcy liquidators to oversee the process.
According to FINMA’s disclosure, customers with deposits of up to 100,000 Swiss francs (approximately $111,710) are entitled to protection, with assurances of reimbursement within seven working days. However, the fate of customers’ crypto deposits remains uncertain.
FINMA stated that it is at the discretion of the liquidator to determine whether cryptocurrencies will be treated as custody assets akin to securities or as claims on the bank within the bankruptcy proceedings.
