The Bank for International Settlements has issued a warning that cryptocurrency exchanges are increasingly offering services similar to traditional banks, including lending and yield products, but without the same level of protection. According to the report, these services, which are often marketed as high-yield savings products, are in reality unsecured loans to lightly regulated entities. The report highlights the rapid growth of 'earn' and yield products, which are widely marketed to retail users as a means of generating passive income from crypto assets. However, these products are often structured more like unsecured lending than savings, and they lack the safeguards that make traditional banking stable.
The report notes that users of these platforms often relinquish control and ownership of their digital assets, which are then used for lending, trading, or market-making strategies. The returns paid to customers are a share of the profits generated from these activities, but the arrangements lack the transparency and insurance offered by traditional finance. The report warns that users are exposed to the platform's solvency in the event of losses and cites the collapse of Celsius Network and FTX as examples of the weaknesses in the industry.
The report also highlights the risks posed by the lack of regulation and oversight in the cryptocurrency market, citing the flash crash of October 2025, which triggered an estimated $19 billion in forced liquidations across crypto derivatives markets.