The Financial Stability Institute, part of the BIS, has published a report analyzing the activities and risk profile of cryptoasset service providers (CASPs). It focused on the large crypto exchange conglomerates with diverse activities that it refers to as multifunction cryptoasset intermediaries (MCIs), with Binance, Bybit, Coinbase, Crypto.com, Kraken, MEXC and OKX provided as examples. The authors outline how several of these intermediaries provide bank-like activities such as maturity and credit transformation and hence propose prudential requirements adapted to the specific details of each entity and its activities.
The authors estimated that recent quarterly trading volumes have been around $6–8 trillion each for spot and futures markets. However, the report’s futures data focuses on bitcoin contracts. Industry figures suggest total crypto derivative volumes across all cryptoassets could be significantly higher, potentially exceeding $24 trillion a quarter.
While the paper explored a wide range of exchange activities, the one that raised the greatest concern was earn programs in which clients transfer ownership of assets to the exchange, with the exchange having significant discretion on how it uses the assets. It could use them for loans or margin lending, to fund proprietary trading or for working capital purposes. For the authors, the challenge is that this is deposit-like behavior but does not require a banking license in many jurisdictions.
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