BIS Warns Crypto Exchanges Are Becoming Shadow Banks: Key Risks for BTC and ETH Investors

The Bank for International Settlements (BIS) has issued a stark warning that cryptocurrency exchanges are increasingly functioning as "shadow banks," posing significant risks to the global financial system. According to the BIS, these platforms are offering services like lending, staking, and credit that mimic traditional banking but operate outside regulatory oversight. This trend could lead to systemic instability, especially for major cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH), as unregulated activities may amplify market volatility and expose investors to counterparty risks. The BIS emphasizes the need for stricter regulations to prevent crypto exchanges from undermining financial stability.