The Swiss Financial Market Supervisory Authority (FINMA) shuts down the crypto-linked FlowBank SA

FlowBank SA, a financial institution connected to crypto, has been closed by the Swiss Financial Market Supervisory Authority (FINMA) due to its financial instability and operational problems.

The bank was discovered to have excessive debt and was unable of fulfilling the essential capital prerequisites, resulting in significant violations of its capital standards. FlowBank has been under scrutiny by FINMA since 2021 for violating regulatory requirements.

Despite the appointment of an autonomous auditor and supervisor in June 2023, the situation worsened due to persistent compliance concerns and violations in capital ratio.

FlowBank confirmed its closure in a letter to clients, citing the revocation of its banking and securities licenses. FINMA has provided assurance that deposits of up to 100,000 Swiss francs worth about $111,710 will be safeguarded, and refunds will be issued within a period of seven business days. The liquidator will determine whether bitcoins are classified as “bank claims” or custodial assets.

The shutdown of FlowBank exemplifies Switzerland’s dedication to stringent operating criteria for cryptocurrency institutions, with the objective of averting occurrences akin to the FTX collapse and guaranteeing that only platforms adhering to regulations can function.

The liquidation of FlowBank SA by FINMA highlights the significance of robust financial stability and stringent regulatory compliance in the crypto banking industry.

Switzerland continues to be a conducive environment for digital assets, but the FlowBank case emphasizes the importance of strict regulations to maintain stability.