US regulators approve tech backed bank Erebor

US regulators have granted preliminary approval for the launch of Erebor, a new bank backed by prominent Silicon Valley figures including Palmer Luckey and Joe Lonsdale, in what marks one of the first major new banking charters since the collapse of Silicon Valley Bank (SVB) in 2023.

The approval signals growing regulatory openness to new entrants targeting the technology and digital asset sectors.

Bank aims to serve the “innovation economy”

Erebor was founded earlier this year by Luckey, the co-founder of defense technology company Anduril, and Lonsdale, the head of venture firm 8VC and co-founder of Palantir Technologies.

The bank counts Peter Thiel’s Founders Fund and Haun Ventures, a crypto-focused investment firm, among its early backers.

Named after the “Lonely Mountain” in J.R.R. Tolkien’s The Lord of the Rings, Erebor aims to serve companies and individuals within the US “innovation economy” — including those working in cryptocurrency, artificial intelligence, defense, and advanced manufacturing.

According to its charter filing, Erebor’s goal is to provide a “stable, low-risk, reliable” banking alternative to fill the void left by SVB’s collapse.

“We want to be a stable, low-risk, reliable bank doing normal banking things without screwing everyone over with undue risk,” Financial Times reported, citing a person close to the company.

Regulatory approval and capital backing

The Office of the Comptroller of the Currency (OCC) granted Erebor preliminary and conditional approval just four months after it filed for a national bank charter in June.

The fast-track approval reflects the Trump administration’s initiative to lower barriers for new entrants, particularly those tied to the technology and digital asset sectors.

The bank must still meet a range of compliance, capital, and cybersecurity requirements before it can officially open its doors, which is expected to take several months.

Erebor is backed by $275 million in capital, most of which is regulatory capital held in reserve and not available for day-to-day operations.

Initial operations have been personally funded by Luckey, though the founders plan to raise additional funding as the bank scales.

The bank’s headquarters will be located in Columbus, Ohio, with a secondary office in New York, and it will operate as a digital-only institution, offering services through a mobile app and website.

While Luckey and Lonsdale were both major donors to Donald Trump’s 2024 presidential campaign, a person close to Erebor said there was “no special treatment” in the approval process, noting that Luckey “had not been asked, nor made a single call in this capacity” to government contacts.

Filling the void left by Silicon Valley Bank

Erebor’s creation was spurred by the collapse of Silicon Valley Bank, which had served as the primary financial partner for US tech start-ups and venture capital firms.

Following SVB’s failure, many in the tech sector struggled to find banks familiar with the needs of high-growth, innovation-driven businesses.

Luckey’s own company, Anduril, had banked with SVB prior to its collapse.

Erebor’s founders saw the opportunity to build a more stable institution serving the same ecosystem.

Stablecoins, cryptocurrencies pegged to assets like the US dollar, are expected to be an important part of Erebor’s operations, as the Trump administration has rolled back several Biden-era restrictions on banks engaging in stablecoin transactions.

Erebor will be led by co-CEOs Jacob Hirshman (formerly of crypto group Circle) and Owen Rapaport, co-founder of Aer Compliance, alongside President Mike Hagedorn, a former senior executive at Valley National Bank.

The FT report also cited a person close to the bank who described Erebor’s approach as “extremely conservative,” emphasizing that it will not be a “wacky, techno crypto bank” but rather a traditional bank serving a modern sector.