The Bank for International Settlements has issued a warning that cryptocurrency exchanges are increasingly providing services similar to those of traditional banks, such as lending and yield products, but without the same level of protection. According to the report, these services, which include 'earn' and yield products, are growing rapidly and are being marketed to retail users as a means of generating passive income from their crypto assets.
However, the report notes that these products are often structured more like unsecured loans than savings products, and they lack the stability and safeguards of traditional banking. The report highlights the risks associated with these products, including the lack of transparency and the potential for significant losses. It also cites the collapse of Celsius Network and FTX as examples of the dangers of these unregulated services. The BIS warns that users of these platforms are exposed to the risk of the platform's insolvency and that the lack of protection and transparency can lead to significant financial losses.