According to the report, the survey found that 75% of crypto hedge fund firms reported issues with accessing, or expanding, banking services for their funds, and 67% had issues with securing banking services for the fund manager itself.

The survey included 160 crypto hedge fund firms, 20 conventional alternative investment managers and 40 crypto sector firms.

By comparison, the poll found none of the respondents from traditional alt managers reported that they lost, or were denied banking services.

Additionally, AIMA reported that just over half of the crypto hedge fund firms said that their bankers notified them that they planned to, or might, terminate their relationship.

Similarly, 40% of the crypto firms surveyed said that they were informed of a possible relationship termination. And, almost all of these firms said that they weren’t given any reason for the move.

Only one traditional alt manager said that they were notified of a possible banking relationship termination, and that it was provided with a clear explanation for the decision, the report said.

The survey aimed to control for differences in assets under management, registration status and external controls (audit, anti-money laundering and accounting controls), concluding that the much higher incidence of banking difficulties for crypto hedge funds, “can only be attributed to the one unique factor among the sample sets, namely the underlying asset class.”

The report noted: “Without access to traditional banking services, crypto hedge funds face numerous operational challenges. These may include difficulties in processing payments, managing cash flows and accessing essential financial tools. The lack of banking relationships can hinder their ability to operate efficiently and compete with traditional financial institutions.”

Employees of these firms can face challenges too, such as trouble getting mortgages, it said.

Banking issues can also negatively affect investor confidence in the crypto sector, the paper suggested.

“Traditional investors may be hesitant to allocate capital to an industry that faces such significant banking challenges. This could potentially slow market growth and limit institutional investors from accessing desired exposure to crypto,” it said.

“The significant discrepancy in banking access between crypto and traditional alternative investment businesses threatens to stifle innovation and hinder the growth and international competitiveness of an important emerging sector in the U.S.,” it added.

AIMA said that it is committed to working with the incoming U.S. administration, policymakers and the banking industry to “address these systemic challenges.”

In particular, it calls for increased regulatory clarity for the crypto investment industry, saying “it is clear that finding a ‘system-wide’ balanced approach that addresses regulatory concerns while fostering innovation will be key to resolving the debanking dilemma.”