Coinbase Chief Legal Officer Paul Grewal took to X to ask for answers after learning from an AIMA study that 75% of crypto hedge funds have problems accessing basic banking services. None of the other traditional investment managers (eg, real estate) had similar problems with the banks.
Grewal's X post raises questions that have been circulating in the media for a long time. You may have heard about it Operation Choke Point 2.0 or read about the edited documents published by Coinbase in which the Federal Deposit Insurance Corporation openly asks banks to stop all activities related to cryptocurrencies. The Alternative Investment Management Association (AIMA) research report gives these concerns new statistical reasons. Along with Grewal, AIMA wants action in the press release.
The survey was conducted in October, and its findings are cause for concern. Before we move to the main takeaways from the press release, we should emphasize that according to AIMA, debunking is only a problem for crypto hedge funds. AIMA surveyed 20 other investors who did not deal with cryptocurrencies, and none of them had issues while receiving basic banking services.
The key takeaways from the AIMA press release
Key points from the AIMA press release are as follows:
- AIMA surveyed 160 crypto hedge funds. Three-quarters of them have struggled with problems accessing or accessing conventional banking services in the past three years.
- The problems can include complete denial of service. Only 2% of the hedge funds whose relationships were to be terminated received a formal explanation for that. The stated reason was that the banks were restricting crypto clients.
- According to AIMA, the suppression of crypto businesses (dubbed “Operation Choke Point 2.0”) is undermining the operational efficiency of the US crypto sector, adversely affecting investor confidence, and making damage to the building of skilled professionals.
John D'Agostino, who co-chairs AIMA's Digital Assets Group, concludes that the banking challenges are not a unique problem because they burden the overall development of an economy and innovation the US.
The full report is available here.
AIMA wants change, Trump promises to end Operation Choke Point 2.0
AIMA calls for a collaborative effort to address the challenges facing the cryptocurrency industry. The association sees a solution in working closely with the new administration, world bank leaders, and policy makers.
During the 2024 Presidential campaign, Trump, who was showing his enthusiasm towards the first Operation Choke Point that started during Obama's tenure in the White House, announced that he was going to close Operation Choke Point 2.0 as soon as he is elected.
But, as the statements made by Jerome Powell at the FOMC event appears, Trump will have to deal with various cryptocurrency suspicions, including those with great effects and high positions.
Wait a minute! Isn't Operation Choke Point 2.0 just a conspiracy theory?
Let's start with some history. Launched during the Obama presidency, Operation Choke Point was a secret Department of Justice program that allegedly aimed to deny banking services to fraudsters of all kinds, including those who dealing in weapons, pornography, drug paraphernalia, etc. The idea was very simple: if we are incomparable. cut access to financial activity for fraudsters, they will not be able to break the law, and many crimes will be prevented.
In a short time, the work gained fame because, due to the lack of clear restrictions, banking turned into a tool against political enemies instead of protecting society from fraud and crime. In 2013, the critics program came to believe that the main objective of Operation Choke Point was to fight the political opposition. During the 2016 Presidential campaign, Donald Trump promised to eliminate this activity.
While Obama-era Operation Choke Point has been officially deployed, today's Operation Choke Point 2.0 has yet to be confirmed. Nevertheless, the leaked documents and cases like those described in the AIMA press release lead people to think that an operation similar to Operation Choke Point exists today and targeting cryptocurrency companies. The act is in effect, regardless of its official name. Although the FDIC seems to be the main actor in the operation, other independent institutions are pushing banks to limit services for clients working in the crypto sector.
Some experts covering this “work” declared that the FDIC attack on the crypto industry is the answer to the turbulent events that will shake the crypto market in 2022. It brings a- in FTX fall, TerraUSD loses its peg and falls completely, Celsius and Voyager freeze user accounts, etc.
However, let's take a closer look at the documents published by Coinbase in December 2024. We will find that the FDIC was pushing banks to stop working with cryptocurrency companies before these events. Although the cases mentioned above are not the result of FDIC actions, they occurred in situations where banks already had to stop serving their crypto clients.
Possible impact of Operation Choke Point 2.0
Banks do not have a clear checklist to determine if the client can access services. In a situation where banks cannot decide what level of risk they are willing to operate at, they may prefer to suspend services to their clients dealing with digital currency in order to back up from the FDIC to avoid.
AIMA has already highlighted the possible effects. To a large extent, pressure on banks and a lack of clear guidance will hinder innovation in the US and make the country unattractive to companies from the digital currency sector.
