Action is needed to address the systemic barriers that crypto-focused hedge fund managers face in accessing crucial banking services, according to the Alternative Investment Management Association (AIMA), a global organisation representing the alternative investment industry.
These obstacles, detailed in AIMA’s latest report, The Debanking Dilemma, threaten to hinder innovation and undermine the competitiveness of the US digital assets sector, a recent press release outlines.
AIMA’s research, based on a comprehensive survey of 160 crypto hedge fund firms, along with 20 traditional alternative investment managers and 40 crypto technology firms, reveal a stark disparity.
While none of the traditional alternative investment managers reported losing or being denied banking services, 75% of crypto hedge fund firms indicated difficulties in accessing or expanding banking services for their funds, and 67% faced similar challenges for their investment management operations.
This gap in access to basic cash management services raises significant concerns about financial inclusivity.
Key findings from AIMA’s survey, include:
- High rejection rates – 75% of crypto hedge fund firms faced issues accessing or growing banking services for their funds, while 67% encountered similar problems for their investment managers. In contrast, none of the traditional alternative investment managers surveyed faced such challenges.
- Unexplained denials – 98% of crypto hedge fund firms that were notified of potential termination of their banking relationships received no clear explanation for the decision.
- Broader impacts – The debanking of crypto firms adversely affects operational efficiency, investor confidence, and talent acquisition. The widespread nature of this issue, often referred to as “Operation Choke Point 2.0,” has broader consequences for the US’s reputation as a leader in financial innovation and open markets.
