Crypto bank backed by Palmer Luckey, Peter Thiel is moving forward

Federal regulators have granted preliminary approval to Erebor Bank, a crypto-and tech-focused startup co-founded by Palmer Luckey and backed by Peter Thiel and Joe Lonsdale this year.

It is the first bank to receive such approval since Comptroller of the Currency Jonathan Gould took office in July. Valued at about $2 billion, Erebor still needs final approval from the FDIC and OCC before opening, a process that typically takes nine and a half months.

The bank derives its name from J.R.R. Tolkien’s The Lord of the Rings book, similar to Luckey’s autonomous weapons company Anduril and Thiel’s software firm Palantir.

Erebor plans to make money by lending against non-traditional assets like cryptocurrency and graphic processing units (GPUs), which are key to AI development.

It is targeting companies in crypto, AI, defense, and advanced manufacturing—positioning itself as a potential successor to Silicon Valley Bank, which collapsed in 2023.

Erebor’s fundraising memo suggested regulators could grant final approval in less than six months, citing Luckey’s political connections. He has contributed over $1 million to mostly GOP politicians and political committees in 2024.

Critics like Sen. Elizabeth Warren warned that fast-tracking such ventures could increase financial risks and taxpayer exposure.