Federal Regulators Grant Initial Approval to Erebor Bank
Federal regulators have given the green light to Erebor Bank, a financial institution with a focus on cryptocurrency and technology, co-founded by Palmer Luckey and supported by prominent investors including Peter Thiel and Joe Lonsdale. Jonathan Gould, the Comptroller of the Currency, emphasized his dedication to fostering a vibrant and varied federal banking system, stating that this decision marks a significant initial step toward that goal.
Significance of Approval for Erebor Bank
This approval is a crucial milestone for Erebor as it seeks to establish operations. It is notable that Erebor is the first bank to obtain this kind of approval since Gould took office in July. Luckey, also known for co-founding the defense company Anduril Industries, initiated the establishment of Erebor earlier this year. According to a July report by Business Insider, both Thiel’s Founders Fund and Lonsdale’s 8VC have invested in Erebor, which has been valued at a minimum of $2 billion.
Next Steps for Erebor’s Launch
Before commencing its operations, Erebor must secure approval from the Federal Deposit Insurance Corporation (FDIC), an application it submitted in July. The typical processing duration for such applications is approximately nine and a half months. Following this, the Office of the Comptroller of the Currency (OCC) will have the authority to grant final approval.
Investor Expectations and Political Connections
A fundraising document circulated earlier this year among potential investors indicated that Erebor expected federal regulators to grant final approval for its banking plans within “less than six months” after its June application submission. This expedited timeline was attributed to Luckey’s political connections, as mentioned in the document. The memo stated, “Palmer’s political network will get this done,” highlighting his influence and access to banking regulators, including Gould.
Political Contributions by Palmer Luckey
Palmer Luckey has made significant political contributions, exceeding $1 million to various politicians and political entities in 2024, primarily aligned with the Republican Party, as per federal records.
Erebor’s Business Model and Regulatory Outlook
Erebor has communicated to prospective investors its intention to generate revenue by providing loans secured against cryptocurrencies and other assets that traditional banks may find challenging to evaluate, such as graphics processing units crucial for artificial intelligence applications. Gould’s statement reinforced that the OCC, under his guidance, does not impose blanket restrictions on banks wishing to engage in digital asset activities, ensuring continued support for innovative financial solutions that adapt to the evolving landscape.
Leadership and Governance at Erebor
The conditional approval letter includes a list of bank executives and directors, as previously reported by Business Insider, along with additional names. Among those named are Diogo Mónica, a co-founder of Anchorage Digital, a cryptocurrency financial institution, and Michael Mosier, a lawyer with a background in technology and former prosecutor, who will serve as independent directors. Neither individual has provided a comment regarding this development.
