BIS warns cryptocurrency exchanges are becoming ‘shadow banks,’ and why that's a risk

The Bank for International Settlements (BIS) released a report warning stablecoin yields and other DeFi “earn” products are bank-like services without the safeguards or insurance.

What to know:

A Bank for International Settlements report warns that many crypto exchanges now offer bank-like lending and yield products that function as unsecured loans to lightly regulated shadow banks.

The report says these “earn” and yield products, heavily marketed to retail investors as passive-income tools, pool customer assets into risky activities without deposit insurance, clear transparency or traditional banking safeguards.

Citing the collapses of Celsius Network and FTX and the October 2025 flash crash, the authors argue that leverage, opacity and deposit-like promises without protection leave users directly exposed to platform solvency risks.