A group of renowned tech investors is launching a new U.S. bank named Erebor, specifically designed to address the significant void left by Silicon Valley Bank (SVB) following its collapse in 2023. This initiative aims to provide much-needed banking support to startups and, crucially, to crypto companies that have since faced considerable challenges in accessing traditional financial services.
The project, as reported by the Financial Times, is under the leadership of Palmer Luckey, the visionary founder of the military tech firm Anduril, and Joe Lonsdale, the founder of venture firm 8VC and co-founder of Palantir. Sources familiar with the matter indicate that the bank has garnered substantial backing from several high-profile investors, including Founders Fund, the venture capital firm closely associated with Peter Thiel.
Erebor has already taken a significant step by filing for a national bank charter in the U.S. This critical move, if approved, would grant the institution the authority to operate as a full-service bank nationwide, expanding its reach and potential impact across various sectors.
The bank's strategic plan is to cater specifically to companies operating in nascent and high-growth areas such as crypto, artificial intelligence, and defense. Beyond corporate clients, Erebor also intends to support individuals involved in these industries, as well as international firms seeking a gateway to the robust U.S. financial system. For the crypto industry, this development could signal a major shift and provide much-anticipated stability.
Why SVB mattered to crypto
Prior to its sudden collapse, Silicon Valley Bank played an unexpectedly pivotal role within the crypto ecosystem. While not exclusively a "crypto bank" like Silvergate or Signature, SVB had evolved into a key banking partner for numerous crypto startups. It offered essential banking services to companies often deemed too high-risk or unconventional by traditional, mainstream lenders.
Its clientele included early-stage crypto firms, foundational blockchain infrastructure projects, and a variety of venture capital funds specifically focused on digital assets. SVB also maintained significant relationships with major stablecoin issuers. A prime example is Circle, the company behind the USD Coin (USDC) stablecoin, which held a substantial portion of its reserves at SVB. Consequently, when SVB went under in March 2023, the reverberations were felt across the entire crypto market, sending shockwaves of uncertainty.
For a brief but alarming period, USDC even experienced a temporary de-pegging from its dollar parity, largely because Circle's funds were temporarily inaccessible at the failed bank. This event underscored serious questions about the inherent safety and stability of crypto's interconnectedness with the traditional banking system. Although Circle ultimately recovered its funds and the USDC peg was restored, the episode vividly exposed the fragility of this critical link.
What happened after SVB fell
Following SVB's demise, its assets were acquired by First Citizens Bank, which subsequently relaunched the SVB brand. While some of SVB's former staff found new roles at HSBC, which attempted to replicate a startup-focused banking model, many within the tech and crypto communities lament that no single institution has fully replicated the comprehensive support and tailored services that SVB once provided.
Startups, particularly those operating in higher-risk or innovative sectors, have since found it considerably more challenging to secure access to credit lines and banking services. While some crypto firms have explored alternative fintech solutions, others have struggled to establish stable and reliable banking partnerships altogether. Compounding these difficulties, U.S. regulators have adopted a notably stricter stance on crypto-banking relationships since early 2023, further tightening the landscape.
Enter Erebor
This is precisely where Erebor intends to make its mark. Its founders assert that the new bank will singularly focus on what they term the "innovation economy." According to its publicly available application, Erebor aims to serve businesses and individuals who perceive themselves as "underserved" by both conventional banks and even newer fintech solutions. This includes entities that have encountered difficulties in securing credit or establishing consistent banking relationships.
A significant area of focus for Erebor is expected to be stablecoins. The bank has explicitly stated its ambition to become the "most regulated entity conducting and facilitating stablecoin transactions." This commitment to regulatory compliance could be a particularly attractive proposition for major players like Circle and other stablecoin projects in search of robust and trusted U.S. banking infrastructure.
However, the precise details of Erebor's regulatory approach and the full extent of its planned crypto services remain somewhat unclear. The comprehensive specifics of its business plan have not been entirely disclosed, with certain portions of the application filed confidentially.
It is also important to note that the bank's day-to-day operations will not be directly managed by its high-profile headline investors. Instead, executive leadership will be provided by Jacob Hirshman, a former adviser at Circle, and Owen Rapaport, who previously managed a digital asset compliance company, serving as co-CEOs. The role of bank president will be filled by Mike Hagedorn, a seasoned executive with extensive experience at Valley National Bank. Erebor will establish its headquarters in Columbus, Ohio, with an additional office in New York, but will operate exclusively as a digital-only bank, providing all services via its dedicated app and website.
What this means for crypto
It is still premature to definitively state whether Erebor will truly emerge as the successor to SVB. The bank charter application still requires approval from U.S. regulators, and the broader relationship between the crypto industry and traditional U.S. banks continues to be characterized by tension and evolving regulations.
Nevertheless, if Erebor successfully obtains regulatory approval and fully implements its ambitious crypto-focused plans, it could indeed become a significant new player in the financial landscape. It has the potential to become a bank willing to collaborate with the types of firms that many other traditional financial institutions still deliberately avoid. At the very least, crypto founders and investors are undoubtedly watching this development with keen interest.
For the time being, Erebor represents a tangible and promising potential path forward in a post-SVB financial world—a segment of the banking landscape that many still feel is conspicuously absent.
