The Bank for International Settlements has issued a report stating that cryptocurrency exchanges are increasingly offering services similar to those of traditional banks, including lending and yield products, but without the same level of protection. This shift has led to the creation of what the report terms 'multifunction cryptoasset intermediaries,' where services that are typically separate are bundled together.
The report highlights the rapid growth of 'earn' and yield products as a major concern, noting that these 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. The lack of transparency and safeguards in these arrangements exposes users to significant risks, including the platform's solvency in the event of losses.
The report cites the collapse of Celsius Network and FTX as examples of the weaknesses in the industry, emphasizing that the issue is not just poor management but a systemic problem of leverage, opacity, and unprotected deposit-like promises. 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 these risks can quickly escalate.