According to a report released by the Bank for International Settlements, cryptocurrency exchanges are increasingly offering services similar to those of traditional banks, including lending and yield products, but without the same level of protection. The report states that what appears to be a high-yield savings product is actually an unsecured loan to a lightly regulated entity.
The crypto industry's largest players have evolved into multifaceted intermediaries, combining services that are typically separated across banks, brokers, and exchanges. The rapid growth of 'earn' and yield products, which are widely marketed to retail users as a means to generate passive income from crypto assets, is a major concern. While these products often promise attractive returns, they are structured more like unsecured lending than savings. The report warns that these platforms are essentially taking deposits and using them for risky activities without the necessary safeguards, leaving users exposed to potential losses.
In many cases, users relinquish control and ownership of their digital assets to the platform, which then uses the funds for various strategies. The returns paid to customers are a share of the profits generated from these activities, but these arrangements lack the insurance and transparency offered by traditional finance. The report cites the collapse of Celsius Network and FTX as examples of the risks posed to users, highlighting the weaknesses that still exist within the industry.
The BIS also references the flash crash of October 2025, which triggered an estimated $19 billion in forced liquidations across crypto derivatives markets, as an example of how quickly these dynamics can spiral out of control.