HomeCrypto NewsSwiss regulator compels crypto-friendly FlowBank to declare bankruptcy

Swiss regulator compels crypto-friendly FlowBank to declare bankruptcy

Swiss online bank FlowBank forced into bankruptcy by financial regulator

FlowBank, a Swiss online bank known for its cryptocurrency trading services, has been forced into bankruptcy by the Swiss financial regulator due to serious breaches in operating standards. The Swiss Financial Market Supervisory Authority announced on June 13 that FlowBank no longer had the minimum capital required for its business operations, leading to fears of over-indebtedness and the need for the bank to be wound up.

FlowBank, which launched in 2020 and offered crypto trading services, was the banking partner for Techteryx, the stablecoin issuer behind TrueUSD (TUSD). The bank was also part-owned by CoinShares and provided banking services to Binance, the world’s largest crypto exchange.

With $760 million in total assets, over 22,000 client accounts, and around 140 staff worldwide, FlowBank’s closure has significant implications for the cryptocurrency industry. Customers with funds up to $111,710 (100,000 Swiss francs) will be protected first, with FINMA working to help them recoup their funds as quickly as possible.

FlowBank had been on FINMA’s watchlist since October 2021 when serious breaches of supervisory law, particularly regarding capital requirements, were identified. Despite efforts to monitor and guide the bank back to compliance, further issues arose in June 2023, leading to the withdrawal of its license on March 8, 2024.

While the ruling is pending an appeal at the Federal Administrative Court, the closure of FlowBank serves as a cautionary tale for the cryptocurrency industry, highlighting the importance of regulatory compliance and financial stability in the rapidly evolving market.

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