Key Insight: The Office of the Comptroller of the Currency conditionally approved a charter application from Erebor Bank, a tech-backed startup serving crypto and high-worth clients.
Supporting Data: Approval includes residency waivers for board members, who normally must reside within 100 miles of the main branch.
Forward look: Erebor's application for federal deposit insurance is still pending before the Federal Deposit Insurance Corp.
The Office of the Comptroller of the Currency Wednesday announced conditional approval of Columbus, Ohio-based Erebor Bank, a startup bank
Erebor's approval marks the first approval of a new bank during Jonathan Gould's term as Comptroller of the Currency, which
"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," Gould said. "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. Permissible digital asset activities, like any other legally permissible banking activity, have a place in the federal banking system if conducted in a safe and sound manner. The OCC will continue to provide a path for innovative approaches to financial services to ensure a strong, diverse financial system that remains relevant over time."
Erebor applied for a charter in June, saying it sought to provide crypto-related products to the "innovation economy," including tech, artificial intelligence, defense and manufacturing companies. The application also notes the firm aims to serve "high and ultra-high net worth" individuals invested in these industries, as well as providing deposit and payment services to foreign banking organizations.
Erebor does not intend to establish a bank holding company or branches during its first three years of operation, but aims to be the "most regulated entity conducting and facilitating stablecoin transactions." With the conditional approval set in motion, the bank will need to gain deposit insurance approval from the Federal Deposit Insurance Corp.
The application seizes on the current administration's signaled openness to new tech-oriented banking models. The firm is backed by massively influential tech investors including Palmer Luckey, founder of Oculus VR and defense-tech firm Anduril, and Peter Thiel, co-founder of PayPal, defense firm Palantir and Founders Fund — who also are major donors to President Trump and have deep ties to his administration.
Erebor's backers have also hinted at a novel structure that diverges from traditional fractional-reserve banking. The firm is considering a "
The group has discussed a conservative balance sheet strategy and floated ideas like one-to-one deposit covenants, where customer funds would remain fully reserved and untouched.
The conditional approval included residency waivers for several directors of the bank, including Trevor Capozza, Michael Hagedorn, Jacob Hirshman, Palmer Luckey, Michael Mosier, and Owen Rapapor. Under OCC rules a majority of a national bank's directors must reside in the state where the bank is located, or within 100 miles of its main office for a year before their election to the board.
Senator Elizabeth Warren, D-Mass., ranking member of the Senate Banking Committee, suggested the approval was influenced by the political connections between the bank's founders and the Trump administration.
"President Trump's billionaire buddies Peter Thiel and Palmer Luckey just received approval from the OCC to launch a new bank that will cater to the financial whims of Silicon Valley billionaires," Warren wrote. "In a free market, credit flows fairly to businesses because they can use the money productively, not to the President's cronies because of their political connections."
