The Bank for International Settlements has issued a warning that cryptocurrency exchanges are increasingly offering 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 often marketed to retail users as a means of generating passive income from their crypto assets, but in reality, they function more like unsecured loans to lightly regulated entities.
The report expresses concern over the rapid growth of these products and the lack of transparency and safeguards, leaving users exposed to significant risks, including the solvency of the platform. The collapse of Celsius Network and FTX is cited as examples of the weaknesses in the industry.
The report highlights the need for greater regulation and oversight to protect users and prevent systemic risks.