Forward-looking: As the regulatory landscape continues to evolve, the success of a new crypto-bank venture called Erebor will depend on its ability to secure federal approval and earn the trust of startups and investors. For now, Erebor represents a bold bet that the future of banking – particularly for tech and crypto – lies in a digital-first model.
When Silicon Valley Bank collapsed in March 2023, shockwaves rippled through the startup world. For decades, SVB had been the primary financial partner for early-stage technology companies, venture capitalists, and crypto startups – businesses often considered too risky by traditional banks. Its sudden failure exposed a critical vulnerability in the innovation economy.
Now, a new digital bank called Erebor is emerging to fill that void. The outfit is backed by a coalition of prominent tech billionaires including Palmer Luckey, co-founder of defense contractor Anduril and Oculus VR, and Joe Lonsdale, co-founder of Palantir, along with Peter Thiel's Founders Fund, and is positioning itself as a modern banking solution for the sectors SVB once served.
The bank has applied for a national charter and plans to operate exclusively online, with its headquarters in Columbus, Ohio, and a secondary office in New York.
Erebor will focus on serving technology-driven businesses and individuals in fields such as artificial intelligence, cryptocurrency, defense, and manufacturing, areas that have struggled to find reliable banking partners since SVB's collapse. The bank also aims to support individuals working in or investing in these industries, as well as international firms seeking access to US banking services.
What sets Erebor apart is its embrace of digital assets. The bank plans to hold stablecoins directly on its balance sheet ,a move that could make it the first US national bank to do so. This approach is designed to meet the needs of crypto businesses while providing a regulated, compliant environment for stablecoin transactions, which have become increasingly important for cross-border payments and digital settlements.
The bank will be led by co-CEOs Jacob Hirshman, formerly an adviser at stablecoin company Circle, and Owen Rapaport, co-founder of digital assets software firm Aer Compliance. Mike Hagedorn, a veteran of Valley National Bank, will serve as president.
While Luckey, Lonsdale, and Thiel will provide strategic direction and financial backing, they are not expected to be involved in Erebor's day-to-day operations. Their presence, however, lends credibility and visibility to the venture, particularly among tech entrepreneurs still seeking stability in the wake of SVB's collapse.
Masthead credit: LA Times