Peter Thiel founds crypto bank Erebor in response to SVB collapse

Peter Thiel founds crypto bank Erebor in response to SVB collapse

Peter Thiel, Palmer Luckey and Joe Lonsdale have founded a new digital bank called “Erebor”. This initiative was created in response to the void left by the collapse of Silicon Valley Bank in 2023. The name “Erebor”, inspired by the world of J.R.R. Tolkien, symbolizes both stability and the treasure character that the founders want to convey with their bank.

The application for a national bank charter was submitted to the US regulator OCC in June 2023, but approval is not expected until 2026 at the earliest. The bank's headquarters will be in Columbus, Ohio, supplemented by an office in New York. Erebor has seed capital of $225 million and will enter the market with a preliminary valuation of $2 billion.

Business model and target groups

Erebor's business model includes classic corporate accounts, credit lines and cash management. Of particular note is the intention to not only custody stablecoins, but also actively hold them on the balance sheet, making Erebor potentially “the most regulated stablecoin bank in the US.”

The bank particularly targets institutional crypto investors and startups operating in artificial intelligence, defense technology and high-risk manufacturing. These industries are often avoided by traditional large banks, so Erebor could be an important point of contact for such companies.

Financing and management

Founders Thiel, Luckey and Lonsdale have ties to the Trump 2024 campaign and are also politically active donors. The Founders Fund will invest in the banking project as the main investor, although the founders will not be involved in day-to-day operations. The management team consists of former Aer Compliance executives who have extensive experience in the financial sector.

Erebor also plans to have a 1:1 reserve system and a loan/deposit ratio of less than 50% to minimize potential risks. The stablecoins such as USDC and DAI will be among the bank's core offerings. Erebor not only wants to operate as a regulated trading institution for stablecoins, but also act as an essential interface provider between traditional banks and crypto assets.

The creation of Erebor marks a significant step at a time when technology companies are facing significant difficulties following the collapse of Silicon Valley Bank. Through the applied for national banking license and the unique business model, Erebor aims to establish itself as an indispensable institution in the emerging crypto financial market.

For more information about the establishment of the bank, readers can consult the reports of BTC ECHO and OKX consult.