The Chief Legal Officer of Coinbase has raised alarm on social media after a recent survey revealed that 75% of crypto hedge funds are facing significant challenges in accessing essential banking services. In contrast, traditional alternative investment sectors, such as real estate, reported no similar issues.
This revelation, stemming from the AIMA survey, highlights ongoing concerns about systemic banking difficulties for the cryptocurrency sector. The survey results provide statistical support for existing worries about “Operation Choke Point 2.0,” a controversial initiative purportedly aimed at stifling crypto business operations. The Alternative Investment Management Association (AIMA) is calling for immediate action in light of these findings.
The survey, conducted in October, focused on 160 crypto hedge funds, and the findings are troubling. According to AIMA, the challenges faced by crypto hedge funds are markedly distinct, as none of the 20 other alternative investment entities surveyed reported issues with banking access.
Key Takeaways from the AIMA Press Release
The AIMA press release outlines several critical findings:
- Three-quarters of the crypto hedge funds surveyed cited difficulties in accessing or expanding their banking services over the past three years.
- Reported issues include outright service denial, with only 2% of hedge funds facing termination of banking relationships receiving a formal explanation. The primary reasoning given was banks limiting services to crypto clients.
- AIMA asserts that the debanking of crypto firms undermines not only operational efficiency but also investor confidence and the recruitment of skilled professionals within the U.S. crypto sector.
John D’Agostino, co-chair of the AIMA Digital Assets Group, emphasized that the banking challenges are not isolated but rather a broader issue impacting the growth of the U.S. economy and innovation.
AIMA Calls for Change
AIMA advocates for a collaborative approach to tackle the banking challenges encountered by the crypto industry. The association seeks to engage with the new administration, banking leaders, and policymakers to find solutions.
During the 2024 Presidential campaign, a notable political figure expressed intentions to eliminate “Operation Choke Point 2.0,” reflecting concerns regarding banking practices toward the cryptocurrency sector.
Operation Choke Point 2.0: A Controversial Initiative
Historically, “Operation Choke Point,” initiated during a previous administration, aimed to deny banking services to certain industries deemed risky. Critics argue that its lack of clear guidelines led to misuse against political opponents rather than purely criminal entities.
While the existence of the modern “Operation Choke Point 2.0” remains unconfirmed, leaked documents and the alarming experiences outlined in the AIMA report suggest that a similar initiative may be undermining the cryptocurrency industry. Notably, the FDIC appears to be a primary actor in this issue, influencing banks to cut services to crypto clients.
Some analysts believe the FDIC’s actions may be a response to turmoil in the crypto market in 2022, but documents from December 2024 indicate that pressure on banks predates those crises.
Implications of Operation Choke Point 2.0
Currently, banks lack a definitive framework to assess client risk, leading them to preemptively restrict services to avoid potential retribution from regulatory bodies like the FDIC. A lack of clarity from regulators may stifle innovation and deter crypto firms from operating in the U.S. market.
