BIS Warns Crypto Platforms Operate Like Banks Without Protections
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James Mitchell combines investment banking with cryptocurrency journalism to analyze the institutional adoption of digital assets. Specializing in ETFs and regulation, he translates complex developments…
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In a recent report published in April 2026, the Bank for International Settlements (BIS) raised significant concerns regarding the operational parallels between major cryptocurrency platforms and traditional banks. The analysis suggests that these crypto entities function as financial intermediaries yet lack the essential capital safeguards, insurance for deposits, and access to central banks that are typical in conventional banking.
According to the BIS Financial Stability Institute, crypto platforms such as Binance and Coinbase have evolved beyond mere trading venues. They now offer a variety of services, including yield-bearing earn accounts, margin lending, and others typically managed by regulated financial institutions.
The total market for crypto assets reached approximately $3 trillion by the end of 2025, with centralized exchanges generating between $6 trillion to $8 trillion in trading volume quarterly. Notably, Binance accounted for nearly 39% of this global centralized spot trading volume, serving between 200 and 230 million users across the leading platforms.
A key concern identified in the BIS report pertains to the nature of crypto earn products. When customers deposit their cryptocurrency into services like Binance’s Simple Earn or Bybit’s Easy Earn, they effectively relinquish ownership of those assets. The platforms pool these funds for various uses, including lending and market-making, and offer users a variable return. Consequently, customers become unsecured creditors rather than protected depositors.
This model results in liabilities that can be quickly redeemed, being supported by longer-duration or less liquid assets. This mismatch in maturity and liquidity mirrors risks traditionally handled by bank regulators through capital and liquidity requirements—standards that do not apply to these crypto intermediaries.
The collapse of Celsius Network in 2022 serves as a stark example. This incident revealed significant vulnerabilities when the platform experienced over $1.4 billion in net withdrawals, leading to a suspension of withdrawals and eventual bankruptcy, with Celsius users confirmed as general unsecured creditors.
Additionally, a severe market flash crash on October 10, 2025, highlighted the risks involved in cryptocurrency trading. Asset prices plummeted rapidly, causing a chain reaction of automated liquidations and generating reported direct losses of $19 billion. Binance faced operational challenges during this event and later announced compensation for customers affected.
Between November 2025 and March 2026, the BIS assessed the terms and conditions of eight major crypto platforms, finding that most earn products grant the companies considerable authority over customer deposits. These platforms often co-mingle funds and reserve the right to pause redemptions without prior notice, raising further alarms about their operational stability.
The potential for leverage amplifies these risks, with some platforms offering retail customers margins as high as 150-to-1 on derivatives contracts, a concern that the BIS linked directly to the October liquidation event.
The Financial Stability Board’s thematic review in 2025 found that of the 28 jurisdictions assessed, only 11 had established regulatory frameworks to address the stability risks posed by these cryptocurrency intermediaries. Alarmingly, only two jurisdictions had regulations specifically aimed at borrowing and lending activities, whereas just three dealt with earn products.
In light of these findings, BIS officials are advocating for the implementation of stringent capital and liquidity requirements as well as comprehensive governance standards and stress testing. They emphasize that without a coordinated regulatory approach, the financial stability risks posed by these crypto platforms will continue to grow, underlining the urgent need for a unified international strategy.
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