Over the past three years, a worrying trend has emerged among crypto hedge funds — severe difficulty in securing banking services.
The issue reflects the broader impact of what many in the crypto space call “Operation Chokepoint 2.0.”
Crypto Banking Difficulties Stimulate Debate Over Industry Discrimination
The Wall Street Journal, citing a recent survey by the Alternative Investment Management Association (AIMA), shed light on this widespread problem. Report indicates that about 120 out of 160 hedge funds specializing in cryptocurrencies — about 75% of survey participants — have encountered obstacles with their banking services.
In contrast, a survey of 20 alternative investors from various industries, including real estate and private credit, did not note similar difficulties.
Banking challenges to crypto funds range from vague communication to outright account closures, often without clear explanation. When reasons are given, they are often related to banks’ reluctance to align themselves with volatile cryptocurrency markets.
This inequality in access to banking has stimulated significant concern among top leaders in the cryptocurrency sector. Paul Grewal, Coinbase’s Chief Legal Officer, questioned why such a high proportion of these funds encountered banking problems while funds in other sectors were not similarly affected. This issue points to the possibility of systematic exclusion of crypto entities from banking services.
Meanwhile, Matt Hougan, Chief Investment Officer at Bitwise, expressed relief that these banking challenges are being discussed more publicly. He noted that the cryptocurrency community has long been aware of these issues, but public discussion often leads to skepticism or denial from outsiders.
Hougan describes the situation as a form of “gaslighting” that has led some in the industry to question the legitimacy of his experiences.
“It’s a relief to see this being discussed publicly. Everyone in crypto sees this happening in real time but if you try to talk about it, people either shrug or imply you’re making it up,” Hougan speak.
However, industry stakeholders are hoping for a change with President Donald Trump’s new administration, which is more crypto-friendly. Already, Mr. David Sacks, who has been appointed Head of AI and Cryptocurrency, emphasized the need to investigate these restrictive banking practices, while also acknowledging the damage they have caused to cryptocurrency-related businesses.