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TL;DR
- A new BIS paper says many large crypto platforms now do much more than trading and custody, offering products that increasingly look like financial intermediation.
- The BIS says these firms can take on credit, liquidity, and maturity risk without the prudential safeguards that usually apply to banks or prime brokers doing similar things.
- The paper argues that “earn” products, margin lending, and derivatives can create vulnerabilities that spread across crypto markets and potentially into traditional finance.
- BIS backs a mix of entity-based and activity-based regulation, along with stronger capital, liquidity, governance, and stress-testing requirements.
The Bank for International Settlements has put large crypto platforms back in the regulatory spotlight. In a new FSI Occasional Paper published on April 23, the BIS argues that many cryptoasset service providers, or CASPs, no longer behave like simple exchanges or custodians. Instead, the biggest players now offer a stack of products that looks much closer to financial intermediation.
Simply put, the BIS is saying some of crypto’s biggest platforms now act less like marketplaces and more like lightly regulated financial firms. That matters because once a platform starts taking customer assets and using them to fund lending, market-making, or other activities, the risk profile changes fast.
The BIS Says The Biggest CASPs Now Resemble Crypto Conglomerates
The paper says the largest firms have expanded beyond trading and custody into yield and earn products, margin and secured lending, derivatives, and token issuance. Because of that mix, the BIS says many of them fit better under the label “multifunction cryptoasset intermediaries,” or MCIs.
That label is important. In the BIS view, these firms are not just adding product lines around the edges. They are combining several functions that traditional finance usually separates across different entities or subjects to tighter controls, largely to limit conflicts of interest and reduce systemic risk.
The Biggest Concern Is Risk Transformation Without Matching Safeguards
The paper’s core warning is straightforward: when MCIs take customer crypto through investment-style products and then use those assets elsewhere in the business, they start taking on credit, liquidity, and maturity risk. BIS says that can make some “earn” products look economically similar to short-term redeemable liabilities, while margin loans and derivatives add more credit and market risk on top.
The problem, according to the paper, is that many of these firms still operate without the kinds of prudential safeguards that would normally apply to financial intermediaries doing similar risk transformation. BIS also says many MCIs do not publish financial statements, while key regulatory gaps remain across existing and newer crypto frameworks.
BIS Ties The Warning To Earlier Crypto Blowups
The paper points to the failures of Celsius Network and FTX in 2022, as well as the crypto flash crash in October 2025, as examples of how these risks can materialize and spread. BIS says the danger rises further as crypto intermediaries deepen their ties with traditional finance.
That lines up with BIS’s earlier work on MCIs. In a 2024 executive summary, it said these intermediaries can amplify leverage, liquidity mismatch, operational weakness, and conflicts of interest, while also acting as a channel through which stress in crypto markets could spill into the broader financial system.
The BIS Wants Tougher Prudential Rules, Not Just Conduct Rules
The paper does not stop at diagnosis. BIS says MCIs engaged in financial intermediation should face prudential requirements such as capital and liquidity buffers, stronger governance and risk management, and stress testing. It also says the best policy mix combines entity-based and activity-based regulation.
At the same time, the paper says the hard part is still ahead. BIS flags incomplete coverage of borrowing and lending in current crypto rules, the need for stronger cross-border supervisory cooperation, limited supervisory resources, and weak data and reporting standards compared with traditional finance.
Why it matters
This paper matters because it sharpens a shift regulators have been hinting at for a while. The debate is moving away from whether crypto platforms are “just exchanges” and toward whether some of them now perform bank-like or broker-like functions without comparable guardrails.
It also gives a clearer clue about what comes next. If regulators adopt the BIS framing more broadly, expect more pressure on large crypto platforms around disclosures, balance-sheet risk, governance, conflicts of interest, and capital and liquidity standards. For the market, that could mean stricter oversight of the parts of crypto that already look a lot like traditional finance — even if they still brand themselves as something different.