The Bank for International Settlements has issued a warning that cryptocurrency exchanges are increasingly offering services similar to those of traditional banks, including lending and yield products, but without the same level of protection for users. According to the report, these exchanges have evolved into complex financial institutions that bundle multiple services, blurring the lines between banks, brokers, and trading platforms. The rapid growth of 'earn' and yield products is particularly concerning, as they are often marketed to retail users as a means of generating passive income, despite being structured more like unsecured loans than savings products.
This lack of transparency and protection leaves users vulnerable to significant risks, as evidenced by the collapse of platforms like Celsius Network and FTX. The report highlights the need for greater oversight and regulation in the crypto industry to prevent such failures and protect users from financial harm.