A consortium of tech industry titans with links to the Trump administration took a significant step toward the creation of a new cryptocurrency-focused bank last week, after the White House on Wednesday gave conditional approval to charter the group’s planned financial institution. Named for J.R.R. Tolkien’s mountain of treasure in “The Hobbit,” Erebor Bank will focus on “technology companies and ultra-high-net-worth individuals that utilize virtual currencies,” the Treasury Department said in its approval letter. But before Erebor is even fully up and running, the bank’s crypto focus and right wing roots are already raising eyebrows.
‘Palmer’s political network will get this done’
Cofounded by defense-tech magnate Palmer Luckey and investor Joe Lonsdale, whose Palantir data analytics firm was launched with billionaire Peter Thiel (another Erebor backer), this new bank will join a “growing list” of institutions “seeking to serve as financial linchpins for a boom in nascent industries including crypto,” said Bloomberg. Erebor was granted its “preliminary and conditional” charter by the Treasury’s Office of the Comptroller of the Currency (OCC) “just four months” after applying in June, said the Financial Times. That's a “sign of the Trump administration’s initiative to lower regulatory hurdles” and “encourage new banking entrants” that focus on digital currencies.
While the White House has pushed for more crypto-investment and deregulation, the speed with which Erebor has moved through the federal chartering process is, by the bank’s own admission, a deliberate feature of the group’s founders. “Palmer’s political network will get this done,” said an Erebor fundraising memo obtained by Business Insider in August. Luckey, brother-in-law to former Florida Rep. Matt Gaetz, is a major Republican donor, alongside Thiel and Lonsdale. “In theory,” said Ja’han Jones at MSNBC, a bank like Erebor could even “prove beneficial to the Trump family,” given the family’s various “ongoing investments in cryptocurrencies.”
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In the context of the Trump administration’s “‘pay to play’ Washington,” where “loyalty to MAGA and a demonstrated willingness to provide money when needed are the only keys needed for government approvals,” it “doesn’t take much imagination” to see Erebor being approved “very, very quickly,” said Columbia University lecturer and financial services expert Todd Baker on Substack in June. “I’d be willing to lay odds that they’ll be approved and open by year end.”
Political heat and regulatory hurdles
Now conditionally chartered, there are still a number of “conditions set by the OCC” that Erebor needs to meet before it can fully “open its virtual doors,” said Axios. The process, which includes compliance and security checks, is expected to take “several months.” But, one insider said to FT, the expedited timeline for Erebor’s full approval is a “reflection of its extremely conservative business plan,” with the final product being not simply a “wacky, techno crypto bank.”
Promises of conservative staidness notwithstanding, Erebor’s progress has earned the attention of consumer protection advocate Sen. Elizabeth Warren (D-Mass.). “In a free market, credit flows fairly to businesses because they can use the money productively,” Warren said in a statement following Erebor’s charter approval. “Not to the president’s cronies because of their political connections.”
