Tech giants join forces to bet on encryption banks, a group of Silicon Valley pros is establishing Erebor.

Author: BitpushNews

The collapse of Silicon Valley Bank (SVB) in 2023 has caused a huge shock to the tech finance industry and left a significant service gap that needs to be filled. Now, a new battle to reshape the financial landscape is quietly unfolding.

According to the latest news from the Financial Times, a new "crypto bank" named Erebor is being prepared with the strong support of U.S. President Trump's steadfast ally, tech billionaire Joe Lonsdale, as well as Silicon Valley giants like Oculus VR founder Palmer Luckey and PayPal co-founder Peter Thiel.

Peter Thiel (right), Palmer Luckey (middle) and Joe Lonsdale (left)

The name Erebor comes from the "Lonely Mountain" in The Hobbit, which is rich in treasures. This may also symbolize the grand goal of this bank: to find "treasure-like" financial services for emerging technologies in the "desert" of traditional finance.

It is reported that Erebor not only aims to fill the service gap left by SVB for technology companies, but also positions stablecoins as its core strategy. Its goal is to become "the most regulated entity for conducting and promoting stablecoin transactions," indicating that the integration of traditional finance and crypto will enter a new stage.

The "Unhealed Pain" of SVB's Collapse: High-Tech Companies Urgently Seek New "Support"

Silicon Valley Bank (SVB) was once the "bank of choice" for American tech startups and the venture capital community, providing services to countless startups considered "high-risk" by traditional large banks. From deposits and loans to investment banking, it covered almost every stage of growth for tech companies. It was deeply integrated with the startup ecosystem in Silicon Valley, becoming an important financial partner for many innovative companies from incubation to IPO.

However, an excessive focus on technology sector clients, large unrealized losses due to misjudgments of the Federal Reserve's interest rate hike cycle, and the speed and scale of bank runs in the era of social media ultimately triggered a liquidity crisis in March 2023.

Although the U.S. government quickly intervened afterwards, implementing emergency measures to protect depositors, traditional large banks have generally continued to adopt a cautious attitude towards technology, especially high-risk startups in the cryptocurrency and AI sectors, following the collapse of SVB. This has resulted in a notable "vacuum" in financial services, making it urgent to find a "new backer" that understands and supports their development.

"Lonely Mountain" Bank Erebor: The Ambitions of Giants

Erebor may have emerged as a result, and its list of founders can be described as luxurious:

Palmer Luckey: The legendary founder of the virtual reality (VR) headset company Oculus VR, he sold Oculus VR to Facebook (now Meta) for a staggering $2 billion, becoming a pioneer in the field of VR. Palmer Luckey then shifted to defense technology, co-founding Anduril Industries in 2017, a company focused on providing advanced AI-driven unmanned systems, sensors, and surveillance technology to the United States and its allies. Anduril quickly rose to prominence in the defense technology sector with its rapid iteration and disruption of traditional defense giants.

Peter Thiel: A Silicon Valley legend with multiple identities: co-founder of PayPal, spiritual leader of the "PayPal Mafia", co-founder of the big data company Palantir, early investor in Facebook, and founder of the well-known venture capital firm Founders Fund.

Peter Thiel is known for his unique libertarianism and contrarian thinking. He has invested in numerous world-changing companies such as SpaceX and Airbnb, and has an unusual obsession with "disruptive innovation." He is also a proponent of cryptocurrency.

Joe Lonsdale: Co-founder of Palantir and political activist. Joe Lonsdale is a protégé of Peter Thiel and one of the co-founders of Palantir. After leaving Palantir, he founded another well-known venture capital firm, 8VC, investing in numerous emerging tech companies. Like Thiel, Lonsdale is also very active politically and is one of the major donors to President Trump's 2024 campaign.

This special political background undoubtedly adds strategic imagination to the future of Erebor. During Trump's second term, the regulatory environment in the United States embraced cryptocurrency, and Erebor's high-profile entry at this time may have precisely seized this "policy dividend window" in an attempt to gain an advantage under the new regulatory framework.

wants to be the "most regulated" stablecoin bank.

According to its application for a national banking license, Erebor Bank will be headquartered in Columbus, Ohio, and will establish a secondary office in New York, adopting a digital-first operating model. It explicitly states that it will serve emerging technology companies in fields such as artificial intelligence, cryptocurrency, defense, and manufacturing, as well as investors and employees in these areas. This vertical segmentation and highly specialized market positioning is the key differentiator for Erebor compared to traditional banks.

Erebor's core strategy lies in its deep embrace of stablecoins and its vision for compliance.

It is reported that Erebor plans to incorporate stablecoins into its balance sheet. As a type of cryptocurrency linked to fiat currencies such as the US dollar, stablecoins are increasingly becoming a key tool for accelerating cross-border payments, simplifying settlements, and expanding the accessibility of digital financial services due to their value stability, high transaction efficiency, and low costs. Previously, fintech companies and traditional financial institutions have begun to experiment with using stablecoins for cross-border settlements, while Erebor has elevated this to a strategic height within core banking operations.

One of the co-CEOs of Erebor, Jacob Hirshman, who previously served as an advisor to the well-known stablecoin company Circle, has been a key player in the issuance of the USDC stablecoin. Circle's compliance framework has been an important gateway for traditional financial institutions to enter the crypto world. Hirshman will replicate a similar path at Erebor, positioning it as the "most regulated stablecoin trading execution and facilitation entity."

Through this strategy, Erebor not only hopes to become the "new financier" in Silicon Valley and the emerging technology sector, but also aims to be the "official bridge" connecting the US dollar and the digital dollar. It could change the traditional ways companies conduct cross-border transactions and manage digital assets, allowing stablecoins to truly enter mainstream finance. Previously, the new guidelines for cryptocurrency ETP disclosures released by the SEC's Division of Corporation Finance also indirectly confirmed that regulatory agencies are actively preparing for the integration of digital assets into the traditional financial system, which aligns with Erebor's compliance path.

The ambition of the new "money masters" in Silicon Valley: Who will benefit and who will be under pressure?

The entry of Erebor Bank is bound to create ripples in the fintech sector, and its impact will be multidimensional:

The emergence of Erebor is timely for emerging tech companies. In innovative fields such as AI and cryptocurrency, many startups have long faced "cold shoulders" from traditional banks. The customized financial services offered by Erebor precisely address these companies' pain points in financing, operations, and compliance, allowing them to focus more on technological innovation. This is undoubtedly good news, especially for Web3 companies, as financial service providers that focus on blockchain technology.

For the entire cryptocurrency industry, Erebor could become an important compliance benchmark. If it can successfully operate its stablecoin business under a strict regulatory framework, it will greatly accelerate the acceptance of digital assets in mainstream markets. This may attract more traditional institutional funds into the cryptocurrency space.

The emergence of Erebor is a warning sign for traditional banking. This emerging digital bank is vying for the most promising tech customer base with its precise positioning and professional background. In the face of such competitors, traditional banks may need to accelerate their pace of innovation and reassess their attitude towards emerging technologies. In the future, we are likely to see more traditional banks begin to transform or choose to collaborate with specialized digital financial service providers.

In conclusion, the competition in the crypto world increasingly resembles a game of giants — capital from Silicon Valley and old money from Wall Street are both entering the fray. Now, Erebor has also joined the competition. Whether this company named after the "Lonely Mountain" can find its own "Arkenstone" may become one of the most noteworthy stories in the coming years.