Concerns in the sector are raised by a recent poll showing that crypto hedge funds find it difficult to get even fundamental banking services. Three out of four crypto hedge funds surveyed in October by the Alternative Investment Management Association (AIMA) show a concerning pattern whereby they identify banking challenges over the past three years. Reportedly not affected by this problem are conventional hedge funds, which reported no such difficulties.
Announced on AIMA’s website in a news release, the findings form part of a paper titled The Debanking Dilemma. With 160 crypto hedge funds and 20 conventional hedge funds, the poll highlights a clear difference between the two industries and implies that their links to digital assets are attracting targets for cyberattacks.
Paul Grewal, Chief Legal Officer of Coinbase, expressed his reservations over the results and demanded quick responses. With zero recorded by twenty other alternative investors surveyed, he asked on X, “Why would three quarters of 160 crypto hedge funds report issues with basic banking services over three years??”
Debanking crypto companies has caused concerns of a concerted regulatory campaign known as “Operation Chokepoint 2.0,” which some believe to be an expansion of an earlier project begun about 2013. Targeting “high-risk” sectors including short-term lenders and adult entertainment at first, Operation Chokepoint aimed to restrict the access these companies had to financial services.
Though the original programme was fading by 2017, reports show that components of this approach have returned during the Biden Administration. The Office of the Comptroller of the Currency (OCC) published rules in 2021 limiting banks’ engagement in cryptocurrency activity. Many among the crypto community see this as a blatant attempt to discredit the sector.
Prospective changes in U.S. leadership have pro-crypto supporters hoping the next election might bring relief. Promising at the Bitcoin Conference, former President Donald Trump has openly promised to stop Operation Chokepoint 2.0, saying, “We’re not going to let that happen.
