The Swiss Financial Market Supervisory Authority (FINMA) has shut down FlowBank, a Swiss online bank that offers cryptocurrency services, due to the bank's inability to maintain sufficient capital and serious breaches of capital requirements. FINMA has also filed for bankruptcy and appointed Walder Wyss as the bankruptcy liquidator. FlowBank's customers with deposits of up to 100,000 Swiss francs will receive refunds within seven working days, but the fate of their crypto deposits remains uncertain.

FlowBank's financial situation had been under scrutiny since October 2021, with FINMA finding serious breaches of supervisory laws related to capital requirements, organizational deficiencies, and risk management. Despite measures taken by FINMA, FlowBank continued to violate capital ratio requirements and exhibited ongoing deficiencies. FINMA's decision to shut down FlowBank was made to protect depositors, and the liquidator will determine whether cryptocurrencies will be treated as custodial assets or claims against the bank.

FlowBank's connections to cryptocurrencies include partial ownership by CoinShares, which acquired 9% of the bank's shares in 2021. After CoinShares' investment, FlowBank began offering customers the ability to buy, sell, and hold cryptocurrencies directly from their accounts. The bank's shutdown has raised concerns about the future of customers' crypto deposits, and the liquidator's decision will determine their fate.

The shutdown of FlowBank serves as a reminder of the risks associated with cryptocurrency investments and the importance of regulatory oversight. As the cryptocurrency market continues to grow, regulatory bodies must balance innovation with protection for investors and depositors. In this case, FINMA's decision to shut down FlowBank was made to protect depositors and ensure that the bank's financial situation does not pose a risk to the broader financial system.

The future of FlowBank's customers' crypto deposits remains uncertain, and the liquidator's decision will have significant implications for the cryptocurrency market. As the situation unfolds, regulatory bodies and investors alike will be watching closely to see how the liquidator's decision will impact the market and the future of cryptocurrency investments.