Gate News message, April 23 — The Bank for International Settlements (BIS) released a report warning that crypto exchanges are increasingly providing bank-like services, including lending and yield products (Earn), but lack the regulatory oversight and deposit protections inherent in traditional finance, creating systemic risk.
The report states that high-yield products are essentially unsecured loans, with user assets frequently deployed by platforms for lending, trading, or market-making activities. Users hold only debt claims against platforms, exposing them directly to insolvency risk if the platform fails. BIS highlighted that major crypto platforms have evolved from single-purpose exchanges into “multi-functional intermediaries” integrating banking, brokerage, and trading functions, but with insufficient transparency and risk isolation mechanisms.
The collapses of Celsius Network and FTX exemplify such structural vulnerabilities. BIS also noted that a flash crash in the crypto market in October 2025 triggered approximately $19 billion in liquidations, underscoring the contagion risks posed by high leverage and opaque structures.
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