FINMA Orders Closure of Crypto Bank FlowBank, Begins Liquidation

FINMA Orders Closure of Crypto Bank FlowBank, Begins Liquidation. In a significant development for the cryptocurrency sector, the Swiss Financial Market Supervisory Authority (FINMA) has ordered the closure of FlowBank, a prominent crypto bank. The decision was announced on June 12, 2024, and marks a pivotal moment in the regulatory oversight of digital asset institutions.

Background on FlowBank

FlowBank was established in 2018 and quickly grew to become a well-known entity in the cryptocurrency banking industry. It offered a range of services, including crypto trading, custodial services, and financial products tailored to digital assets. FlowBank was considered a pioneer in integrating traditional banking services with the emerging world of cryptocurrencies.

Reasons for Closure

FINMA cited several reasons for the closure of FlowBank. The primary issues revolved around:

  1. Regulatory Non-Compliance: FlowBank was found to be non-compliant with several key regulatory requirements. These included anti-money laundering (AML) policies, customer due diligence, and reporting standards. FINMA highlighted that despite multiple warnings, the bank failed to address these critical issues.
  2. Financial Irregularities: An audit revealed financial irregularities in FlowBank’s operations. These irregularities raised concerns about the bank’s financial stability and the security of customer funds.
  3. Risk Management Failures: FlowBank’s risk management practices were deemed inadequate. The bank was unable to manage the risks associated with its crypto-related activities effectively. This posed significant risks to its clients and the broader financial system.
  4. Operational Issues: There were also operational inefficiencies and management problems that contributed to the decision. These issues affected the bank’s ability to provide reliable and secure services to its customers.

Impact on Customers

The closure of FlowBank has significant implications for its customers. FINMA has assured customers that their funds are a top priority during the liquidation process. However, there are several key points of concern:

  1. Access to Funds: Customers may face delays in accessing their funds as the liquidation process unfolds. FINMA has stated that efforts will be made to expedite the return of customer assets, but some delays are inevitable.
  2. Loss of Services: FlowBank’s customers will lose access to the various services provided by the bank. This includes trading platforms, custodial services, and other financial products.
  3. Uncertainty: The closure has created uncertainty and anxiety among customers. Many are concerned about the security of their assets and the potential for financial losses.

Liquidation Process

FINMA has appointed a liquidator to oversee the orderly winding down of FlowBank’s operations. The liquidation process will involve several key steps:

  1. Asset Assessment: The liquidator will assess FlowBank’s assets and liabilities. This includes identifying customer funds, outstanding obligations, and other financial commitments.
  2. Return of Customer Funds: One of the primary objectives is to return customer funds as quickly and efficiently as possible. The liquidator will work with FINMA to ensure that customer assets are protected and returned promptly.
  3. Sale of Assets: FlowBank’s remaining assets will be sold to cover its liabilities. This may include selling off its crypto holdings, real estate, and other tangible assets.
  4. Settlement of Claims: The liquidator will also address claims from creditors and other stakeholders. This includes settling outstanding debts and obligations in an orderly manner.

Industry Reactions

The closure of FlowBank has elicited a range of reactions from industry stakeholders:

  1. Regulatory Community: Regulators have welcomed the decision as a necessary step to maintain the integrity of the financial system. They emphasize the importance of strict regulatory compliance in the crypto industry.
  2. Crypto Community: The reaction from the crypto community has been mixed. Some see it as a setback for the industry, while others view it as a necessary step to weed out non-compliant entities and strengthen the sector.
  3. Customers: Customers of FlowBank have expressed frustration and concern. Many are anxious about the security of their funds and the disruption to their financial activities.
  4. Industry Experts: Experts believe that the closure underscores the need for robust regulatory frameworks for crypto banks. They argue that while the crypto industry holds great potential, it must operate within a framework that ensures security and compliance.


The closure of FlowBank by FINMA is a significant event in the ongoing evolution of the cryptocurrency industry. It highlights the importance of regulatory compliance and robust risk management practices for digital asset institutions. While the closure presents challenges for FlowBank’s customers, it also serves as a reminder of the critical role of regulation in maintaining the stability and integrity of the financial system.

As the liquidation process unfolds, the industry will be watching closely to see how regulatory authorities manage this complex and high-profile case. The outcome will likely influence future regulatory approaches and shape the development of the crypto banking sector in Switzerland and beyond.

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