BIS Warning: Cryptocurrency exchanges are evolving into "shadow banks," and users face unprotected risks

The Bank for International Settlements (BIS) released a report indicating that cryptocurrency exchanges are gradually providing bank-like services, such as lending and earn products, but lack the regulation and deposit protection found in traditional financial systems, posing systemic risks.

The report states that these high-yield products are essentially closer to "unsecured loans," where user assets are often used by the platform for high-risk operations such as lending, trading, or market making, and users only hold a creditor position against the platform. If the platform encounters problems, users will be directly exposed to repayment risks. The BIS also noted that leading cryptocurrency platforms have evolved from single exchanges into "multi-functional intermediaries," integrating the functions of banks, brokerages, and exchanges, but lacking transparency and risk isolation mechanisms. The previous collapses of Celsius Network and FTX are typical cases of such structural risks. Additionally, the report mentioned that the flash crash in the cryptocurrency market in October 2025 triggered approximately $19 billion in forced liquidations, highlighting the chain reaction risks under high leverage and opaque structures.