US Approves Erebor Bank: US regulators have officially approved the launch of Erebor Bank, a new financial institution backed by a group of tech billionaires with close ties to former President Donald Trump’s administration. The move comes as the banking sector seeks to fill a gap left by the 2023 collapse of Silicon Valley Bank (SVB) — once the go-to financial hub for tech startups and venture capital firms.
Erebor, named after the “Lonely Mountain” from J.R.R. Tolkien’s The Hobbit, was founded this year by Palmer Luckey, co-founder of defense tech company Anduril, and Joe Lonsdale, venture capitalist and co-founder of Palantir Technologies.
Other major early backers include Peter Thiel’s Founders Fund and Haun Ventures, a prominent crypto-focused investment firm.
💼 Erebor’s Mission: A “Stable, Low-Risk” Tech Bank
According to Erebor’s charter application, the bank aims to serve the U.S. innovation economy, particularly companies in cryptocurrency, artificial intelligence, defense, and manufacturing sectors.
“We want to be a stable, low-risk, reliable bank doing normal banking things without screwing everyone over with undue risk,”
— a person close to Erebor stated.
The founders claim Erebor will focus on stability and compliance, distancing itself from risky speculative ventures that led to the downfall of Silicon Valley Bank and several crypto-focused institutions in recent years.
🏦 Fast-Tracked Approval Amid Trump’s Push for Deregulation
The Office of the Comptroller of the Currency (OCC) granted Erebor “preliminary and conditional” approval just four months after its application — an unusually fast turnaround.
This decision aligns with Trump’s administration’s pro-deregulation stance, which aims to reduce barriers for new digital banking entrants. Regulators under Trump have been pushing for fintech and crypto-related firms to receive national bank charters, encouraging innovation in the financial sector.
OCC head Jonathan Gould stated:
“Today’s decision shows the OCC under my leadership does not impose blanket barriers to banks that want to engage in digital asset activities.”
💰 Strong Financial Backing and Political Links
Erebor is backed by $275 million in capital, much of which is held as regulatory reserves and not used for operations. Its early operations are being fully funded by Palmer Luckey himself.
Interestingly, both Luckey and Lonsdale were major Trump donors during the 2024 election, while Peter Thiel supported Vice President J.D. Vance.
While critics allege that Erebor’s rapid approval might be politically motivated, insiders deny any “special treatment.” They claim Luckey “made no calls” or political requests to speed up the process.
🏙️ Digital-Only Operations and Expansion Plans
Erebor will operate digitally, with its head office in Columbus, Ohio, and a secondary office in New York City. The bank’s services will be available through a mobile app and website, targeting tech entrepreneurs, AI developers, defense contractors, and crypto firms.
The bank’s executive team includes:
- Owen Rapaport, CEO (former Aer Compliance co-founder)
- Jacob Hirshman, Chief Strategy Officer (formerly with Circle)
- Mike Hagedorn, President (ex-Valley National Bank executive)
Neither Luckey nor Lonsdale will be involved in the daily management of the bank.
🪙 Stablecoins and Digital Asset Banking
Erebor is also expected to play a major role in the stablecoin ecosystem — cryptocurrencies pegged to real-world assets like the U.S. dollar.
With Trump’s administration rolling back Biden-era restrictions on banks dealing with digital assets, Erebor may become one of the first federally chartered banks to provide regulated stablecoin and crypto services.
A source close to the company said the bank’s rapid approval was largely due to its “conservative business plan”, adding that Erebor is “not going to be a wacky techno crypto bank.”
⚠️ Political and Regulatory Controversy
Not everyone is pleased with the OCC’s decision. Senator Elizabeth Warren, a leading Democrat on the Senate Banking Committee, criticized the move, calling Erebor a “risky venture that could set up another taxpayer-funded bailout.”
“Credit should flow fairly to productive businesses — not to the President’s political allies,” Warren said.
Her comments highlight growing concerns about political favoritism and the influence of billionaires on U.S. financial regulation.
🔮 What Erebor Means for the Future of Banking
Erebor represents a new breed of hybrid banks — blending traditional financial structures with modern digital technologies and crypto integration.
If successful, it could inspire a wave of new digital-first banks serving niche industries like AI, defense tech, and blockchain. However, its close political connections and focus on deregulated finance may also invite scrutiny from lawmakers and regulators in the future.
For now, Erebor’s approval marks a major milestone in reshaping how tech and finance intersect in post-SVB America.
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