In a newly published research report, the Bank of International Settlements (BIS) warns that many cryptoasset service providers, or CASPS, engage in risky financial intermediation activities traditionally performed by banks and prime brokers, without the prudential safeguards that apply to such intermediaries.

• Shadow Dangers: The BIS is sounding the alarm on CASPS that together form a lightly regulated shadow banking sector. According to Occasional Paper Number 27, such service providers offer lending and “earn” products that resemble traditional bank deposits, but that lack deposit insurance, regulatory oversight, and other standard safeguards. The BIS report argues many of these products are effectively unsecured loans…