The Bank for International Settlements has released a report highlighting the growing trend of cryptocurrency exchanges offering services similar to traditional banking, such as 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 notes that the largest players in the crypto industry have evolved into multifaceted intermediaries, offering a range of services that would typically be provided by separate entities such as banks, brokers, and exchanges. The authors of the report express concern over 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 lack the stability and safeguards of traditional banking. The report warns that users of these platforms are exposed to significant risks, including the potential loss of control and ownership of their digital assets, and the lack of transparency regarding how their assets are being used. The report cites the collapse of Celsius Network and FTX as examples of the weaknesses in the industry, highlighting the need for greater regulation and protection for users. The Bank for International Settlements also points to the flash crash of October 2025, which resulted in an estimated $19 billion in forced liquidations across crypto derivatives markets, as an example of how quickly the dynamics of the industry can spiral out of control.