Palmer Luckey’s ambitious crypto-friendly digital banking startup Erebor has received conditional approval from regulators to start operations, federal officials announced Wednesday.
As The Post was first to report, Luckey, the 32-year-old tech mogul known for leading the fast-growing defense firm Anduril, is among the chief backers for Erebor – which aims to aims to provide a stable option for Silicon Valley firms and tech entrepreneurs to park their money and cryptocurrency outside traditional banks.
Tech investor Joe Lonsdale of venture firm 8VC is another key backer for Erebor, as is Peter Thiel’s Founders Fund.
Conditional approval from the Office of the Comptroller of the Currency, an independent branch of the US Treasury, marked a crucial step forward for the startup, which is based in Columbus, Ohio. It still needs to clear a few more regulatory hurdles before it can open for business – a process likely to take several months.
“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,” Comptroller of the Currency Jonathan Gould said in a statement.
“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,” he added.
An Erebor representative declined to comment.
Luckey is listed as Erebor’s principal shareholder and a member of its board of directors. Owen Rapaport, the cofounder of crypto-monitoring company Aer Compliance, is listed as Erebor’s CEO.
The startup’s unusual name is a reference to the mountain where the dragon Smaug stores his hoard of gold in J.R.R. Tolkien’s “The Lord of The Rings” prequel “The Hobbit.”
Sources previously told The Post that Erebor will handle cash plus deposits in stablecoin, a class of digital currency with value directly pegged to a “stable” asset like the US dollar or gold.
Talks about Erebor began soon after the sudden collapse in 2023 of Silicon Valley Bank and accelerated as some tech investors grumbled about crypto and crypto-adjacent startups getting “debanked” by traditional institutions during the Biden administration.
Luckey is not expected to play a role in Erebor’s day-to-day operations.
President Trump — who got backing from Luckey and Lonsdale as well as many other tech and crypto executives during his 2024 campaign — has taken a much friendlier regulatory approach to the industry.
Luckey and his allies also are seeking an alternative to traditional fractional reserve banking – where banks deploy most of their client deposits while keeping a relatively small amount in reserve at any given time.
Insiders say Erebor will focus on helping tech entrepreneurs build their businesses as opposed to maximizing returns on deposits.
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