December 22, 2024
Over the past three years, a worrying phenomenon has emerged among cryptocurrency hedge funds — a worrying difficulty in securing banking services.
This issue highlights the broader impact of what many in the cryptocurrency sector are referring to as “Operation Chuck Point 2.0.”
Growing Crypto Banking Difficulties Spark Debate Over Discrimination in Industry
The Wall Street Journal, citing a recent survey by the Alternative Investment Management Association (AIMA), highlighted this widespread problem. The report found that about 120 out of 160 crypto-focused hedge funds — about 75% of respondents — faced obstacles with their banking services.
In contrast, a survey of 20 alternative investors from various sectors, including real estate and private credit, reported no such difficulties.
Banking challenges for crypto funds have ranged from vague communications to outright account closures, often without clear explanation. When reasons were given, they usually related to banks’ reluctance to get involved in the volatile crypto market.
This gap in access to banking services has raised significant concerns among senior crypto executives. Paul Grewal, Coinbase’s chief legal officer, has questioned why a large percentage of these funds are experiencing banking problems while their counterparts in other sectors are not. This issue suggests that crypto entities may be systematically excluded from banking services.
Meanwhile, Matt Hogan, chief investment officer at Bitwise, expressed relief that these banking challenges are now being discussed more openly. He noted that the crypto community has long been aware of these issues, though discussing them publicly often led to skepticism or outright denial from outsiders.
“It’s a very comforting feeling to see this being discussed openly. Everyone in crypto has seen this happen in real time but if you try to talk about it, people either shrug their shoulders or suggest you’re making it up,” Hogan said.
However, industry stakeholders are hopeful that a shift will occur with the incoming administration of President Donald Trump, who is more friendly toward cryptocurrencies. Indeed, David Sachs, the new czar of artificial intelligence and cryptocurrencies, has emphasized the need to investigate these restrictive banking practices while acknowledging the harm they have done to crypto-related businesses.
