New bank with tech and Trump ties clears key regulatory hurdle
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Palmer Luckey. Photo: Kyle Grillot/Bloomberg via Getty Images
U.S. banking regulators have given conditional approval to a new digital bank co-founded by Palmer Luckey and backed by Peter Thiel.
Why it matters: The swift approval for Erebor — only four months after its application for a banking charter was submitted — illustrates the Trump administration's light touch on banking regulation.
- Thiel, Luckey and the bank's other co-founder, Joe Lonsdale, have been major Republican donors.
- A fundraising memo to prospective bank investors touted that Luckey's "political network" would help the review process, Business Insider reported in August.
Zoom out: Erebor said in its charter application that it would provide "virtual currency-related products and services," as well as traditional banking.
- "The target market for the Bank comprises businesses that are part of the United States innovation economy, in particular technology companies focused on virtual currencies, artificial intelligence, defense, and manufacturing, as well as payment service providers, investment funds and trading firns (including registered investment advisers, broker dealers, proprietary trading firm, and futures commission merchants)."
- Those ambitions position it to be the successor to Silicon Valley Bank, which served a number of tech startups before a bank run led to its collapse in March 2023.
Of note: Like Luckey's Anduril, a defense tech startup, and Thiel's and Lonsdale's Palantir, Erebor's name comes from the J.R.R. Tolkien books.
What they're saying: "I am committed to a dynamic and diverse federal banking system, and our decision today is a first but important step in living up to that commitment," Comptroller of the Currency Jonathan V. Gould said in a statement. "Today's decision is also proof that the OCC under my leadership does not impose blanket barriers to banks that want to engage in digital asset activities."
The other side: "Trump's financial regulators just fast tracked an approval of this risky venture that could set up another bailout funded by American taxpayers and destabilize our banking system," Sen. Elizabeth Warren (D-Mass.) said in a statement.
What to watch: Before Erebor can open its virtual doors, it needs to meet a number of conditions set by the OCC, a process that is expected to take several months, per the Financial Times.
