tl;dr
Switzerland's FlowBank SA, a crypto-linked bank, was shut down by the Swiss Financial Market Supervisory Authority (FINMA) due to concerns about its financial health and bankruptcy. The regulator found that the bank breached minimum capital requirements and exhibited organizational deficiencies, ult...
Switzerland’s FlowBank SA, a crypto-linked bank, was shut down by the Swiss Financial Market Supervisory Authority (FINMA) due to concerns about its financial health and bankruptcy. The regulator found that the bank breached minimum capital requirements and exhibited organizational deficiencies, ultimately leading to its dissolution.
FlowBank's customers are assured protection for deposits up to 100,000 Swiss francs, but the fate of crypto deposits remains uncertain. The liquidator will determine how cryptocurrencies will be treated in the bankruptcy process.
The Swiss Financial Market Supervisory Authority (FINMA) has closed the crypto-linked bank FlowBank SA, citing financial reasons. The lender does not have enough capital to continue operating as a bank. FINMA expresses serious concerns about FlowBank’s minimum capital requirements and indicates that the bank is “over-indebted,” making restructuring potentially impossible.
Reportedly, FINMA had FlowBank on its watchlist since 2021 amid serious breaches of supervisory regulations. The bank fell short of capital requirements and did not meet organization and risk management thresholds.
The findings revealed that FlowBank SA repeatedly violated capital requirements and exhibited multiple organizational deficiencies. These issues, along with recent developments, led to the regulator’s decision to dissolve the bank after a week.
FlowBank acknowledged the dissolution in a letter to its clients, highlighting the revocation of its license as a bank and securities. Nevertheless, FINMA assures FlowBank customers that deposits up to 100,000 Swiss francs are protected.
Unfortunately, the fate of customers’ crypto deposits remains unclear, entirely in the liquidator's hands. According to FINMA, the liquidator is tasked with determining whether cryptocurrencies will be treated as “claims on the bank” or as custody assets in the bankruptcy process.
The Swiss regulator’s action is unsurprising, given Switzerland’s reputation as one of the most crypto-friendly European countries. Several Swiss banks support operations with digital assets. Shutting down a platform that fails to meet operating criteria aims to prevent a similar outcome to the FTX implosion rather than acting against crypto.
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