Federal Approval Granted to Erebor Bank
Federal regulators have given initial approval to Erebor Bank, a financial institution that focuses on cryptocurrency and technology, co-founded by Palmer Luckey and supported by investors Peter Thiel and Joe Lonsdale. Jonathan Gould, the Comptroller of the Currency, expressed his commitment to fostering a diverse and dynamic federal banking system, stating that this decision marks a significant initial step in fulfilling that promise.
Erebor Bank’s Journey to Approval
This approval is a crucial milestone for Erebor as it seeks to launch operations. Notably, this is the first bank to obtain such clearance since Gould assumed his position in July. Palmer Luckey, who is also known for co-founding Anduril Industries, a company specializing in autonomous weapons, initiated the formation of Erebor earlier this year. Reports from July indicated that Thiel’s Founders Fund and Lonsdale’s 8VC had invested in Erebor, placing its valuation at no less than $2 billion.
Next Steps for Erebor
Before Erebor can officially commence its banking operations, it must receive approval from the Federal Deposit Insurance Corporation (FDIC), having submitted its application in July. The standard processing duration for such applications is approximately nine and a half months. Following this, the Office of the Comptroller of the Currency may provide final approval.
Ambitious Timeline and Political Connections
A fundraising memorandum circulated earlier this year to potential investors indicated that Erebor expected federal regulators to grant final approval within “less than six months” after its June application submission. This optimistic timeline was attributed to Luckey’s political connections, as suggested in the memo, which stated, “Palmer’s political network will get this done.” Additionally, it highlighted Luckey’s “unique connectivity to banking regulators,” including Gould himself.
Political Contributions and Industry Expertise
Palmer Luckey has contributed over $1 million to various politicians and political committees for the 2024 election cycle, primarily aligning with Republican causes, according to federal records. Adam Cohen, an attorney from the firm Skadden who assisted Erebor with its OCC application, transitioned to the OCC in August to serve as Gould’s chief counsel.
Innovative Business Model for Erebor
Erebor has informed potential investors that it plans to generate revenue by providing loans backed by cryptocurrencies and other assets that traditional banks may find challenging to evaluate, such as graphics processing units essential for training artificial intelligence systems. Gould emphasized that the OCC, under his leadership, is open to banks wishing to engage in digital asset activities, reinforcing a commitment to innovation in financial services.
New Appointments at Erebor
The conditional approval letter for Erebor includes several executives and directors, some of whom were reported in July, along with new additions. Notable names include Diogo Mónica, co-founder of the crypto financial institution Anchorage Digital, and Michael Mosier, a lawyer with a background in technology and former prosecutor, both appointed as independent directors. Neither has responded to requests for comments.
