In a significant development, Erebor, a crypto-focused startup, has been granted the first new national bank charter in the United States during President Donald Trump’s second term, according to the Wall Street Journal. This approval by the Office of the Comptroller of the Currency (OCC) marks a milestone, allowing Erebor Bank to operate on a national scale.
The bank, which launched with a robust $635 million in capital, aims to fill the void left by the 2023 collapse of Silicon Valley Bank by catering to startups, venture-backed firms, and high-net-worth individuals. Erebor has garnered substantial backing from notable tech investors such as Andreessen Horowitz, Founders Fund, Lux Capital, 8VC, and Elad Gil. Oculus co-founder Palmer Luckey, instrumental in establishing the project, will contribute as a board member without engaging in daily operations.
Erebor is carving a niche as a specialist lender to cutting-edge sectors, including defense technology, robotics, and advanced manufacturing. The bank's prospective clientele features companies innovating in areas such as AI-driven factories, aerospace research, and pharmaceutical production in low-gravity conditions. Luckey has described Erebor as akin to a 'farmers’ bank for tech', emphasizing the traditional banking sector's lack of expertise in evaluating unconventional startup assets.
Erebor's approach includes incorporating blockchain-based payment systems to facilitate continuous settlement, a feature that diverges from the typical business-hour-bound transactions of the US banking system. The Federal Deposit Insurance Corporation (FDIC) has already provided deposit insurance approval for Erebor, bolstering its credibility.
The bank's strategy involves offering credit secured by cryptocurrency holdings or private securities, alongside financing for high-performance AI chip acquisitions. In an impressive leap, Erebor's valuation soared to $4 billion following a $350 million funding round led by Lux Capital, doubling from a previous valuation of $2 billion.
This approval follows Erebor's preliminary conditional approval from the OCC in October, and subsequent deposit insurance green light from the FDIC. The bank's innovative approach and crypto integration signal a transformative period in the banking landscape, particularly for emerging technologies and industries.