A new crypto bank has emerged in the form of Erebor, a firm backed by a group of tech billionaires, including Peter Thiel, a figure with connections to President Donald Trump’s administration. Having received regulatory approval to launch, the bank is seeking to address the gap left by the collapse of Silicon Valley Bank (SVB).
According to its banking charter application, Erebor intends to serve businesses within the US “innovation economy,” particularly tech companies concentrated on cryptocurrencies, artificial intelligence (AI), defense, and manufacturing.
Erebor was granted “preliminary and conditional” approval by regulators on Wednesday, just four months after submitting its application for a national bank charter in June.
Despite the bank’s ties to the political landscape in the US, a representative clarified that there was “no special treatment” from the Trump administration during the approvals process.
In a statement on Wednesday, Gould noted that Erebor was the first new bank to receive preliminary conditional approval since his appointment, reinforcing that the OCC under his leadership is willing to support banks engaging in crypto activities.
Erebor is backed by $275 million in capital, with the majority held as regulatory capital and not intended for immediate operations. The founders plan to seek additional funding in the future to expedite expansion.
The bank will be headquartered in Columbus, Ohio, with a secondary office in New York, but it will provide digital-only customer service, marketing its offerings through a smartphone app and website.
A source close to Erebor indicated that the bank’s rapid approval reflects its “extremely conservative business plan,” emphasizing that it would not operate as a “wacky, techno crypto bank.”
However, the approval has drawn criticism, particularly from Senator Elizabeth Warren, the leading Democrat on the Senate Banking Committee. She described Erebor as a “risky venture that could set up another bailout funded by American taxpayers.”
Mike Hagedorn, formerly a senior executive vice president at New Jersey-based Valley National Bank, will serve as the bank’s president.
Featured image from DALL-E, chart from TradingView.com
