The Bank for International Settlements has issued a report highlighting the growing trend of cryptocurrency exchanges 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 services, which resemble high-yield savings products, are in reality unsecured loans to lightly regulated entities.
The report notes that the largest players in the crypto industry have evolved into multifaceted intermediaries, combining services typically provided by separate entities such as banks, brokers, and exchanges. The rapid growth of 'earn' and yield products, which are widely marketed to individual users as a means of generating passive income from their crypto assets, is a major concern. These products often promise attractive returns but are structured more like unsecured lending than savings, and they lack the stability and safeguards of traditional banking.
Users of these platforms often relinquish control and ownership of their assets, which are then used for lending, trading, or market-making strategies, with returns paid to customers as a share of the profits generated. However, these arrangements lack the insurance and transparency of traditional finance, leaving users exposed to the platform's solvency in the event of losses. The report cites the collapse of Celsius Network and FTX as examples of the risks faced by users, highlighting the weaknesses that still exist within the industry. The BIS also references the flash crash of October 2025, which resulted in an estimated $19 billion in forced liquidations across crypto derivatives markets, as an illustration of how quickly these dynamics can escalate.