Palmer Luckey’s Erebor Bank Receives Preliminary OCC Approval for Crypto Operations
Erebor Bank, co-founded by Anduril’s Palmer Luckey, has secured preliminary conditional approval from the Office of the Comptroller of the Currency. This development marks a significant milestone for crypto banking in the United States. The Columbus, Ohio-based institution targets technology companies operating in crypto, artificial intelligence, and defense sectors.
The approval came approximately four months after Erebor submitted its charter application in June 2025. OCC Comptroller Jonathan Gould emphasized that this decision demonstrates the agency’s commitment to a dynamic federal banking system. The regulator confirmed that digital asset activities have a legitimate place within regulated banking frameworks.
Erebor Bank Founders and Backing Behind the Crypto Initiative
Palmer Luckey and Joe Lonsdale co-founded Erebor Bank with backing from Peter Thiel’s Founders Fund. Additional early investors include Haun Ventures and 8VC, bringing the bank’s capitalization to $275 million. Lonsdale co-founded Palantir Technologies alongside Thiel, while Luckey built Anduril Industries into a leading defense technology company.
The bank’s creation responded directly to Silicon Valley Bank’s collapse in 2023. That failure left many tech startups without suitable banking partners. Luckey’s Anduril previously banked with SVB before its dramatic downfall. The founders recognized an opportunity to build a more stable institution serving innovation-driven businesses.
Michael Hagedorn will serve as president, with Owen Rapaport and Jacob Hirshman acting as co-chief executives. This leadership team brings extensive experience across the finance and technology sectors.
Crypto Banking Services Erebor Plans to Offer
Erebor’s application outlines plans to become “the most regulated entity conducting and facilitating stablecoin transactions.” The bank intends to accept cryptocurrencies as collateral for certain lending products. Services will include traditional lending and deposit products alongside digital asset offerings.
The bank aims to compete with Anchorage Digital for stablecoin issuance and custody services. Lending against crypto assets or AI hardware could expand liquidity options for miners and infrastructure firms. Erebor will operate exclusively through digital channels, offering services via mobile applications and websites.
Crypto Bank Approval Process Faces Political Scrutiny
Senator Elizabeth Warren expressed concerns about the expedited approval process. The Massachusetts Democrat warned that the bank could require taxpayer-funded bailouts. Warren stated the approval could favor politically connected entrepreneurs over ordinary businesses.
However, sources close to Erebor denied special treatment during the regulatory review. Financial services experts noted that regulators have maintained a four-month turnaround goal for charter applications. Meeting this timeline suggests the OCC takes deadline commitments seriously under current leadership.
The OCC must enforce strict conditions, including maintaining a minimum 12% Tier 1 Leverage ratio for three years. These requirements ensure adequate capital reserves and risk management protocols.
Next Steps for Erebor’s Crypto Banking Charter
Erebor must secure approval from the Federal Deposit Insurance Corporation before launching operations, a process that typically takes nine to ten months to complete. The bank cannot accept deposits or offer services until it satisfies all pre-opening requirements.
Analysts predict that dual OCC-FDIC oversight could establish new compliance standards for digital asset banking. The regulatory framework may influence how future crypto banks structure their operations. Galaxy Research forecasts that regulated banks could capture 25% of the stablecoin market by late 2026.
Conclusion
Palmer Luckey’s Erebor Bank represents a significant development in crypto banking regulation. The preliminary OCC approval signals growing acceptance of digital assets within traditional banking frameworks. Success depends on meeting stringent capital requirements and securing FDIC approval.
