Erebor: The New Bank for US Innovation Economy
The US regulatory authorities have greenlit the establishment of a new bank, Erebor, backed by a consortium of tech billionaires with ties to the Trump administration. This move aims to fill the gap left by the collapse of Silicon Valley Bank. Erebor’s creation comes as part of a broader initiative by the Trump administration to lower regulatory hurdles and promote new banking entrants focusing on digital assets and services. The approval is expected to fuel further tech advancements and impact the business landscape, both in Washington and globally.
Behind the Scenes: The Founders and Backers
Erebor was founded this year by Palmer Luckey, co-founder of military contractor Anduril, and Joe Lonsdale, head of venture capital firm 8VC and co-founder of data analytics firm Palantir. Other early backers of the bank include Peter Thiel’s venture firm Founders Fund and Haun Ventures, a crypto-focused investor.
Target Market: The US Innovation Economy
Erebor’s primary market will be businesses that form part of the US “innovation economy.” This includes tech companies centred on cryptocurrencies, artificial intelligence, defence, and manufacturing. Additionally, the bank will cater to individuals working for, or investing in these companies. An insider close to Erebor stated, “We want to be a stable, low-risk, reliable bank doing normal banking things without screwing everyone over with undue risk.”
Approval and Launch Timeline
US regulators granted Erebor “preliminary and conditional” approval in just four months after its application for a national bank charter in June. However, the bank will need to meet a few more requirements, including checks on its compliance and security systems, before it officially opens, which is expected to take several more months.
The Political Influence
Both Luckey and Lonsdale were significant donors to Trump in the 2024 presidential election, while Thiel backed vice-president JD Vance. Erebor’s fundraising memo hinted that Luckey’s “political network” and the bank’s strong ties to regulators will ensure its approval by late 2025. However, a person close to Erebor denied any “special treatment” from the Trump administration in the approval process.
Operational Structure and Future Plans
Erebor is backed by $275mn of capital, most of which is regulatory capital held in an account and will not be used for its operations. All of its operations have been financed by Luckey to date. The founders plan to raise more funding in the future to expedite its expansion. The bank’s head office will be in Columbus, Ohio, with an additional office in New York. However, it will offer digital-only customer service, marketing all of its products and services via a smartphone app and website.
Impact on the Cryptocurrency Market
Cryptocurrencies known as stablecoins, pegged to real-life assets like the dollar, are expected to form a significant part of Erebor’s operations. The Trump administration has reversed several rules from the Biden administration limiting banks from stablecoin transactions. Consequently, Erebor’s swift approval reflects its extremely conservative business plan. The bank is not going to be a “wacky, techno crypto bank,” according to an insider.
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