Regulation
FINMA Orders Closure of Crypto Bank FlowBank, Begins Liquidation
The Swiss financial watchdog, the Financial Market Supervisory Authority (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.
FlowBank Shut Down by Swiss Regulator FINMA
FlowBank, 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, CoinShares, 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 Binance, 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.
Crypto Deposit Fate Unclear Post-Bank Closure
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 European Central Bank (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: Gary Gensler Says ETH Spot ETF S-1 Might Be Approved This Summer
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Hawk Tuah girl Hailey Welch, known for her association with the controversial $HAWK token, has been cleared of any wrongdoing after a lengthy investigation by the U.S. Securities and Exchange Commission (SEC). The SEC has decided not to press charges against Welch in connection with the rapid rise and subsequent collapse of the meme-based cryptocurrency.
US SEC Investigation Into Hawk Tuah Girl Concludes Without Charges
The SEC had launched an investigation into the $HAWK token after its dramatic price drop. The token, which was linked to Welch’s viral persona, initially saw a market cap surge to $490 million before crashing by over 90%. Investors who were impacted by the crash filed a lawsuit against those behind the project, alleging that the coin had been promoted and sold without proper registration.
Hawk Tuah girl Hailey Welch, who cooperated fully with the investigation, expressed relief after the SEC’s decision. “For the past few months, I’ve been cooperating with all the authorities and attorneys, and finally, that work is complete,” Welch told TMZ.
Her attorney, James Sallah, confirmed that the SEC had closed the case without any findings against her, adding that there would be no monetary sanctions or restrictions on Welch’s future involvement in cryptocurrency or securities.
This Is A Developing News, Please Check Back For More
Kelvin Munene Murithi
Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Barely a week after hinting at launching an algorithmic USD stablecoin, Sonic Labs is shuttering its plans. Sonic Labs co-founder Andre Cronje revealed that incoming stablecoin regulation in the US contributes to the change of stance.
Sonic Labs Makes U-Turn Over Algorithmic USD Stablecoin
In mid-March, Sonic Labs disclosed plans for a yield-generating algorithmic stablecoin for its blockchain. However, new developments in the US regulatory landscape are forcing the company to ditch its algorithmic stablecoin ambitions.
Sonic Labs co-founder Andre Cronje confirmed the change in direction via an X post following the release of the full draft of the STABLE Act by Congress for clearer oversight. According to the text, lawmakers are pushing for a two-year moratorium on algorithmic stablecoin, souring Sonic Labs plans.
Unlike mainstream stablecoins backed by fiat or other commodities, algorithmic stablecoins rely on smart contracts to maintain their peg. The 2022 implosion of Terra’s ecosystem following the de-pegging of its TerraUSD (UST) algorithmic stablecoin stunned regulators.
“We will no longer be releasing a USD-based algorithmic stablecoin,” said Cronje.
In a light-hearted note, community members teased potential strategies for Sonic Labs to sidestep incoming stablecoin regulation. Apart from the loophole of launching the algorithmic stablecoin before the regulation goes live, Cronje teased an algorithmic dirham that will be denominated in USD.
Industry Players Are Bracing For New Stablecoin Regulations
Stablecoin issuers are steeling themselves for incoming stablecoin regulations in the US. While the GENIUS Act and STABLE Act continue to inch forward, there are common denominators in both bills.
For starters, there is the requirement for equivalent reserves at a 1:1 ratio with both bills steering clear of algorithmic stablecoins. The White House is favoring the GENIUS Act over the STABLE Act as lobbyists rally to stifle the possibility of a Conference Committee.
Authorities are targeting stablecoin regulation to reach Trump in two months as issuers jostle for position. Tether, Circle, and Ripple are staking their claims to lead the US government’s ambitions to rely on stablecoins to maintain the dollar’s dominance.
Aliyu Pokima
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
The Federal Deposit Insurance Corporation (FDIC) has updated its guidelines, enabling banks to engage in cryptocurrency-related activities without seeking prior approval. This new policy shift signals a change in the FDIC’s approach to the growing role of digital assets in the banking sector.
New FDIC Guidelines on Crypto-Related Activities
The FDIC has issued a new Financial Institution Letter (FIL-7-2025), which provides updated guidance for banks looking to engage in cryptocurrency activities. The new guidance rescinds the previous policy set out in FIL-16-2022, which required banks to notify the FDIC before engaging in such activities.
Under the new rules, banks can now participate in permissible crypto-related activities without waiting for FDIC approval, as long as they manage the risks appropriately.
This change is seen as a shift in the FDIC’s stance, following the agency’s earlier stance that required prior approval for crypto engagements. FDIC Acting Chairman Travis Hill expressed that this new approach aims to establish a more consistent framework for banks to explore and adopt emerging technologies like crypto-assets and blockchain.
“With today’s action, the FDIC is turning the page on the flawed approach of the past three years,” said Hill in a statement.
This Is A Developing News, Please Check Back For More
Kelvin Munene Murithi
Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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