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. This trend has led to the emergence of 'multifunction cryptoasset intermediaries' that combine services typically provided by separate entities such as banks, brokers, and exchanges.
The report expresses concern over the rapid growth of 'earn' and yield products, which are often marketed to retail users as a means of generating passive income from their crypto assets. However, these products are essentially unsecured loans that lack the stability and safeguards of traditional banking.
Users who invest in these products are exposed to the risk of losses and may not have control over their assets, which can be used by the platform for various activities such as lending, trading, or market-making. The report cites the collapse of Celsius Network and FTX as examples of the risks faced by users and highlights the need for greater transparency and protection in the industry. It also references the flash crash of October 2025, which resulted in an estimated $19 billion in forced liquidations across crypto derivatives markets, as a demonstration of how quickly these risks can materialize.