Stacy Pereira
- Tech billionaires—Palmer Luckey, Peter Thiel and Joe Lonsdale proposed a digital-first U.S. bank called Erebor.
- The bank has applied for a national banking charter, with operations planned in Ohio and New York.
- Erebor plans to provide banking services to companies in crypto, defense, AI, and manufacturing.
A consortium of well‑known tech billionaires are preparing to launch Erebor, a U.S.-based digital bank that aims to fill in the void left by Silicon Valley Bank’s collapse in March 2023. The venture is spearheaded by Palmer Luckey, co‑founder of Anduril, with key financial support from Peter Thiel’s Founders Fund, Joe Lonsdale, founder of Palantir, among others.
Like Anduril and Palantir, Erebor’s name is a reference to JRR Tolkien’s The Lord of the Rings, an FT report suggested. It is an ode to the “Lonely Mountain” in the books, whose treasures are reclaimed from the dragon Smaug.
What is Erebor?
Erebor has applied for a national bank charter and plans to operate primarily online, with its headquarters in Columbus, Ohio, and a satellite office in New York. It intends to deliver traditional banking services alongside crypto-asset offerings, including handling and facilitating stablecoin transactions. The charter application highlights Erebor’s goal of becoming “the most regulated entity conducting and facilitating stablecoin transactions.”
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What does the bank propose to do?
The bank will target companies in innovation sectors like cryptocurrency, artificial intelligence, defense, and manufacturing, as well as individuals, founders, employees, and investors in these industries. It also plans to work with non-US companies “seeking access to the US banking system”. The bank aims to extend credit to firms typically deemed too risky by mainstream financial institutions.
Erebor also plans to hold stablecoins on its balance sheet. A crypto asset class pegged to currencies such as the U.S. dollar. According to the charter application, the bank will be led by Owen Rapaport, co-founder and CEO of digital assets software company Aer Compliance and Jacob Hirshman, an adviser at crypto group Circle, both acting as co-CEOs.
If approved, Erebor’s launch could rejuvenate tailored banking support for startups and crypto entrepreneurs who have suffered since the closure of SVB.
