A new report from the Bank for International Settlements (BIS) highlights how cryptocurrency exchanges are increasingly offering banking-like services but without the safety nets found in traditional finance. The study emphasizes the rapid growth of high-yield products promoted by leading crypto platforms and warns that users are exposed to financial risks lacking any real protection.
Crypto exchanges expand beyond trading
Initially specializing only in buying and selling digital assets, crypto exchanges have evolved to provide a range of services such as lending, funding, and high-yield savings products. According to BIS’s 38-page analysis, this development resembles the consolidation seen among intermediaries in the traditional banking sector.
Yet, experts point out that “earn” and yield-based schemes in the crypto ecosystem are particularly attractive to individual investors. However, these products operate much like unsecured lending rather than standard savings accounts. Users frequently hand control of their crypto assets to these platforms, which may then use the assets for lending, market making, or even their own operations.
The BIS report stated, “These structures, presented as high-yield savings products, essentially function as unsecured loans to loosely regulated shadow banks.”
Lack of traditional financial safeguards
Unlike regulated banks, crypto exchanges do not provide safeguards such as collateral or insurance for user funds. When users deposit digital assets on these platforms, they often remain unaware of where and how their assets are later used or held.
This creates a situation where investors risk losing access to their funds if a platform fails or suffers losses. The report underlines that, despite surface similarities to bank deposit accounts, these products create unsecured claims against the platform rather than providing any binding guarantees to users.
“From the user’s perspective, these products create unsecured rights to the intermediary; in case of loss, users are fully dependent on the platform’s ability to repay,” the report evaluated.
Lessons from past crypto collapses
The BIS analysis also references the collapses of Celsius Network and FTX, two high-profile failures that illustrated how poorly supervised structures can harm investors. The report notes that it was not only mismanagement but also leverage, opacity, and uninsured deposit-like promises that undermined these systems.
The fragile nature of crypto markets was highlighted again by a sudden market crash in October 2025. During that event, forced liquidations in the derivatives market reached approximately $19 billion, showing how the system can be shaken both quickly and unpredictably.
BIS underscored, “What happened with Celsius and FTX was not solely a result of bad management; the systems were built on high leverage, opacity, and unsecured deposit-like promises.”
The report’s authors conclude that existing regulations fall short and stress the need to improve consumer protection in the crypto sector. They urge users to exercise particular caution with high-yield products offered by these platforms, warning that the promise of high returns comes with increased risks.
