Palmer Luckey to Launch Erebor, a Digital Bank for the Crypto Era

Tech entrepreneur Palmer Luckey is launching a new digital bank in the U.S. called Erebor. This bank will focus on fast-growing and cutting-edge industries like crypto, artificial intelligence (AI), defense, and manufacturing. Erebor is backed by well-known tech investors, including Joe Lonsdale, co-founder of Palantir, and Peter Thiel’s Founders Fund, according to Reuters.

The goal of Erebor is to provide banking services to startups and investors in industries that traditional banks often see as too risky. These include new technology companies that are still in their early stages but are growing quickly. Erebor aims to become a trusted financial partner for these companies.

Filling the Gap Left by Silicon Valley Bank

Erebor’s crypto bank launch comes after the collapse of Silicon Valley Bank (SVB) in March 2023. SVB was once the most important bank for tech startups and venture capital firms. It provided services like loans, payroll accounts, and capital funding. But when SVB failed during a liquidity crisis, many companies couldn’t access their money. This left them struggling to pay their employees and keep their businesses running.

Since then, many startups and tech firms have struggled to identify banks that understand their unique needs. Traditional banks often avoid working with these high-risk industries. Erebor aims to bridge that gap by building a banking system designed specifically for innovation-driven businesses.

Erebor’s Vision and Leadership Team

Erebor has officially applied for a national bank charter in the U.S., which would allow it to operate across the country. It plans to run as a fully digital bank, meaning customers will be able to use banking services online or through an app. The headquarters will be in Columbus, Ohio, with a secondary office in New York.

According to its application, Erebor will serve both businesses and individuals working in crypto, AI, defense, and related industries. It will also work with international companies and investors looking to access the U.S. financial system.

Joe Lonsdale, one of the lead investors, told Reuters, “I am a proud investor in the project.” He said Erebor is designed to help the types of companies that Silicon Valley Bank once supported.

The leadership team includes Owen Rapaport and Jacob Hirshman as co-CEOs. Hirshman previously worked with Circle, a major stablecoin company. Mike Hagedorn, who previously held leadership roles at Valley National Bank, will be the bank’s president. While Luckey and Lonsdale are backing the bank financially, they will not be involved in daily management.

The name Erebor comes from J.R.R. Tolkien’s The Lord of the Rings, where Erebor is a mountain filled with treasure. The name was chosen to reflect strength, security, and long-term value.

A Focus on Stablecoins and the Future of Finance

One of Erebor’s standout features is its plan to hold stablecoins on its balance sheet. Stablecoins are a type of cryptocurrency that is tied to real-world currencies, such as the U.S. dollar. They are used in the financial world to expedite payments, lower costs, and mitigate currency risks.

According to its charter filing, Erebor wants to be “the most regulated entity conducting and facilitating stablecoin transactions.” This means it will follow strict rules to make sure its crypto-related services are secure and legally compliant. The Erebor crypto bank will offer both traditional services, like accounts and loans, and modern services, including stablecoin support.

Right now, Erebor is waiting for approval from the regulators. Upon receiving the necessary authorization, it could start offering services soon. Many in the tech world are watching closely, especially since there’s still a need for a reliable bank that understands the needs of startups and the future of finance.