Crypto Bank

Bank

April

Spot

The Swiss financial watchdog, the<a href="https://coingape.com/taurus-receives-finma-approval-for-retail-tokenized-securities/" rel="noopener noreferrer nofollow"> Financial Market Supervisory Authority </a>(FINMA), closed FlowBank and declared it insolvent. This came after FlowBank was found to lack proper capital and was reportedly in deep debt. Deposits of up to 100,000 Swiss francs are guaranteed, but the situation with the crypto assets is still unclear.
<h2 id="strong-flowbank-shut-down-by-swiss-regulator-finma-strong">FlowBank Shut Down by Swiss Regulator FINMA</h2>
<a href="https://coingape.com/binance-eases-investors-worries-with-independent-custodians-collaboration/" rel="noopener noreferrer nofollow">FlowBank</a>, an online Swiss bank active in the crypto space, has been shut down by the Swiss FINMA. This comes against the backdrop of the bank being found to be having inadequate capital to support its operations. FINMA stated that FlowBank had violated the minimum capital requirements to a very high degree and in a severe manner. There are also some valid concerns regarding the bank’s current high level of indebtedness. Therefore, FINMA does not expect changes to the bank’s structure shortly.
In a letter to its customers published on the bank’s current website, FlowBank stated that it had received confirmation from FINMA. All bank web pages have been automatically redirected to this notice. A Swiss-based law firm, Walder Wyss, has been appointed the bankruptcy liquidator. This is a proper way to handle the bank’s shutdown and attend to customer needs.
FlowBank was established in 2020 and is a contemporary bank with strong connections to the crypto industry. In 2021, <a href="https://coingape.com/coinshares-valkyrie-funds-will-not-apply-for-a-spot-ethereum-etf/" target="_blank" rel="noopener noreferrer nofollow">CoinShares</a>, a crypto asset manager, acquired 9% ownership of FlowBank for $11.8 million. This investment allowed FlowBank to provide its customers with the ability to buy, sell, and hold cryptocurrencies and other tokenized assets through their accounts. This integration made FlowBank stand out as one of the leading banks in the crypto banking sector.
In the first quarter of the year, it was reported that <a href="https://coingape.com/binance-conducts-first-in-person-law-enforcement-training/" target="_blank" rel="noopener noreferrer nofollow">Binance</a>, the world’s leading cryptocurrency exchange, would allow some institutional clients to store their digital assets with FlowBank. This partnership revealed that FlowBank has a strong presence in the crypto market. However, the closure has implications for the future of such partnerships and the overall impact on crypto-friendly banks.
<h2 id="strong-crypto-deposit-fate-unclear-post-bank-closure-strong">Crypto Deposit Fate Unclear Post-Bank Closure</h2>
The announcement of FINMA is somewhat comforting to FlowBank’s customers with conventional deposits. People with up to 100,000 Swiss francs in their accounts will get their money back within a week. However, the future of customers’ crypto deposits is less clear. According to FINMA, it is the liquidator’s responsibility to determine whether these cryptocurrencies are custody assets or claims on the bank.
The distinction is crucial. If classified as custody assets, cryptocurrencies will be treated like securities in bankruptcy, which could provide better protection for crypto holders. On the other hand, if treated as claims on the bank, the recovery of these assets might be more complex. This uncertainty is a significant concern for customers who have leveraged FlowBank’s crypto services.
FlowBank’s closure comes amid changes within FINMA’s leadership. Earlier this year, FINMA appointed Stefan Walter, a former <a href="https://coingape.com/ecb-cuts-rate-signaling-crypto-rally-ahead-us-fed-follow-suit/" target="_blank" rel="noopener noreferrer nofollow">European Central Bank</a> (ECB) chief, as its new CEO, effective April 1, 2024. This decision followed the resignation of the previous CEO, Urban Angehrn, who left last year due to health reasons. The leadership transition at FINMA signals a potentially new regulatory approach in the Swiss financial sector.
Also Read: <a href="https://coingape.com/bnb-chain-binance-labs-launch-bnb-incubation-alliance-bia-heres-everything/" target="_blank" rel="noopener noreferrer nofollow">Gary Gensler Says ETH Spot ETF S-1 Might Be Approved This Summer</a>
The post <a href="https://coingape.com/finma-orders-closure-of-crypto-bank-flowbank-begins-liquidation/" rel="noopener noreferrer nofollow">FINMA Orders Closure of Crypto Bank FlowBank, Begins Liquidation</a> appeared first on <a href="https://coingape.com" rel="noopener noreferrer nofollow">CoinGape</a>.

FINMA Orders Closure of Crypto Bank FlowBank, Begins Liquidation

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