Palmer Luckey’s Erebor Bank has gained preliminary approval from federal regulators to operate as a crypto and techfocused financial institution. The approval marks a significant milestone as it is the first granted since Jonathan Gould became the Comptroller of the Currency in July 2023.
Erebor Bank Overview
Erebor Bank was cofounded by Palmer Luckey, known for creating Oculus VR, and is backed by prominent investors such as Peter Thiel and Joe Lonsdale. The bank is currently valued at approximately $2 billion.
Regulatory Approval Process
Gould indicated that this decision is a step towards promoting a diverse federal banking system. However, Erebor must still secure approval from the Federal Deposit Insurance Corporation (FDIC), which it applied for in July. The average processing time for FDIC applications is about nine and a half months.
Once the FDIC gives its approval, the Office of the Comptroller of the Currency can issue final authorization for Erebor to commence operations.
Revenue Model and Future Plans
- Erebor aims to generate revenue by lending against various assets.
- These assets include cryptocurrencies and items like graphics processing units (GPUs) that support AI training.
A fundraising memo revealed Erebor anticipated receiving final approval in less than six months after submitting its application in June. This optimistic timeline is attributed to Luckey’s connections within the political landscape.
Leadership and Governance
The initial approval letter mentioned several executives and directors associated with Erebor, including Diogo Mónica, a cofounder of Anchorage Digital, and Michael Mosier, a techindustry lawyer. Both have significant experience in the financial and tech sectors.
Political Engagement
Palmer Luckey has actively contributed over $1 million to various political figures and organizations in 2024, primarily favoring Republican candidates. His political engagement has been noted as a potential asset in navigating the regulatory landscape.
The actions of the Office of the Comptroller of the Currency under Gould’s leadership suggest a progressive approach to digital asset activities. Gould emphasized that the OCC seeks to facilitate innovative financial services while ensuring the banking system remains robust and diverse.