Federal Regulators Grant Preliminary Approval to Crypto Bank
Federal banking regulators have granted conditional approval to Erebor Bank, the cryptocurrency and technology-focused financial institution co-founded by Palmer Luckey and backed by prominent investors Peter Thiel and Joe Lonsdale. According to reports, this preliminary approval represents a crucial milestone toward the bank’s official launch and marks the first such authorization since Comptroller of the Currency Jonathan Gould was sworn in this past July.
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Jonathan Gould stated in an official release from the Office of the Comptroller of the Currency that “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.” The conditional approval documentation outlines the specific requirements Erebor must meet before receiving final authorization to operate as a national bank.
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Political Connections and Expedited Timeline
Sources indicate that Erebor’s fundraising materials circulated earlier this year anticipated federal approval in “less than 6 months” following its June application submission, a notably accelerated timeline compared to standard processing periods. According to the analysis of banking application procedures available through the FDIC’s transparency portal, the median processing time for such applications typically exceeds nine months.
The fundraising memo reportedly emphasized that “Palmer’s political network will get this done,” highlighting Luckey’s political connections as a key advantage. Federal records show Luckey contributed over $1 million to political committees in 2024, primarily to Republican-aligned organizations. The memo also referenced a cofounder’s “unique connectivity to banking regulators” including Comptroller Gould himself.
Regulatory Background and Personnel Connections
Analysts suggest the regulatory landscape appears increasingly favorable for cryptocurrency banking ventures under the current leadership. Gould previously served as a senior official in the Office of the Comptroller of the Currency during the Trump administration and briefly worked as chief legal officer at Bitfury, a bitcoin mining company.
Personnel connections between Erebor and regulators have drawn attention from industry observers. Adam Cohen, a lawyer from firm Skadden who worked with Erebor on its OCC application, left the firm in August and joined the OCC as Gould’s chief counsel. This transition occurred during the bank’s application review process, though no improper influence has been alleged.
Bank Leadership and Business Model
The conditional approval letter reveals several key appointments to Erebor’s leadership team, including Diogo Mónica, cofounder of crypto institution Anchorage Digital, and Michael Mosier, a tech-industry lawyer and former prosecutor, as independent directors. Luckey, who also co-founded defense technology company Anduril Industries, helped establish Erebor earlier this year alongside his other ventures.
According to reports, Erebor has informed prospective investors that it plans to generate revenue by lending against cryptocurrency and other difficult-to-value assets, such as graphics processing units essential for training artificial intelligence models. The bank’s unique name references the Lonely Mountain from J.R.R. Tolkien’s Middle-earth legendarium, continuing Luckey’s pattern of using Tolkien-inspired names for his ventures.
Remaining Hurdles and Industry Context
Before commencing operations, Erebor must still secure approval from the Federal Deposit Insurance Corporation, for which it applied in July. The successful launch would position Erebor alongside other financial technology innovations currently developing globally, including Waymo’s planned robotaxi expansion and CIBC’s innovation banking initiatives.
Gould’s statement emphasized that “the OCC under my leadership does not impose blanket barriers to banks that want to engage in digital asset activities,” suggesting a regulatory environment increasingly accommodating to cryptocurrency ventures. This development occurs alongside other significant technology sector movements, including ASML’s projected sales changes and international regulatory scrutiny affecting global technology markets.
Business Insider previously reported that Thiel’s Founders Fund and Lonsdale’s 8VC have invested in the startup, valuing Erebor at approximately $2 billion. A lawyer for Erebor reportedly did not immediately respond to requests for comment regarding the conditional approval.
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