White-label crypto products & 2008 flashbacks?

White-label crypto products & 2008 flashbacks?

You read it. A cautionary insight from Prof. Patrick Augustin, Luxembourg-born and associate professor of finance at McGill University.

In a powerful interview with Paperjam, he compares today’s surge in white-labeled crypto products offered by traditional banks to the sale of complex Lehman Brothers products to retail investors before the 2008 crisis.

And the parallels are hard to ignore.

Here are the main risks he highlights:

• Reputational & legal exposure:
  Banks outsourcing crypto products risk associating their brand with platforms they don’t fully control or understand.

• Custody & counterparty risk:
  As FTX and Celsius showed, even institutional players can get burned. Crypto custody isn’t “just like” traditional asset custody, but requires new frameworks and constant vigilance.

• Lack of client education:
  Crypto assets are volatile, complex, and protocol-dependent. Without proper education, retail clients risk engaging with products they don't understand, undermining trust and opening doors to liability.

• Volatility + infrastructure risk:
  Unlike traditional instruments, crypto assets carry protocol-level vulnerabilities: think lost private keys, smart contract bugs, and validator failures. Banks need to integrate these into their risk frameworks.

• Regulation lagging innovation:
  MiCA is a step forward, but it doesn’t yet cover everything, especially DeFi. Financial institutions can’t rely solely on regulation to manage the complexity. They must develop internal expertise.

Prof. Augustin's bottom line?
“To keep pace with the crypto space, banks need to invest in training and stay current with technological and regulatory developments.”

At OffChain Luxembourg, we couldn’t agree more.

We’ve already delivered crypto education sessions, including an Intro to Blockchain for the team at CACEIS.

But the real question is:
Who else is stepping up?

Spuerkeess?
BIL?
BGL BNP Paribas?
Post Finance?
Raiffeisen?

Luxembourg wants to position itself as a leader in digital finance. But leadership starts with knowledge and right now, that’s the missing piece.

Crypto can be a risk or an opportunity.
It depends entirely on how well you understand it.

Whether you’re exploring crypto products, preparing for MiCA, or simply want to strengthen your internal risk capabilities, we’re here to help. 🧡

Interested? Just reach out!

Because if banks want to offer crypto products, they should understand them first.

And if they don't, well.. they should expect someone else stepping in to serve their customers' needs, even if not from Luxembourg, thanks to MiCA passporting, from anywhere in the EU..

Make the right choice!🧡