Tech billionaires plan new bank to serve crypto and startup firms

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A newly launched American bank backed by famous tech moguls and venture capital firms—like Anduril co-founder Palmer Luckey and 8VC's Joe Lonsdale—is looking to storm the banking sector with a optimistic offer: bank the kind of high-risk, high-reward tech startups that traditional banks are afraid to touch. Redesignated Erebor, after the mountain fortress in The Lord of the Rings, the bank hopes to become a haven for cryptocurrency startups, AI, defence, and manufacturing startups—particularly in a post-SVB world, the Financial Times reported.

A response to the failure of Silicon Valley Bank

Erebor was conceived in the wake of the 2023 Silicon Valley Bank failure, which had long served as the banking backbone of the startup world. While First Citizens rebooted SVB and many erstwhile bankers swarmed to HSBC, investors believe the innovation economy is still lacking the type of specialized financial know-how SVB once offered. Erebor's founders, who include early Palantir investors, as well as Donald Trump's 2024 campaign contributors, believe they can do better.

Under its application for a national bank charter, Erebor will offer both conventional financial products and crypto-linked offerings—a unique combination in today's regulatory climate. Its target customers will be entrepreneurs and startups operating in new tech areas, and cryptocurrency users who typically struggle to find banking partners due to compliance and risk concerns.

Backed by tech's libertarian wing

The venture is backed by several of the most vocal libertarian-leaning venture capitalists in Silicon Valley. Luckey and Lonsdale are accompanied by Peter Thiel's Founders Fund as a probable investor too. Erebor, referring to Tolkien legendarium, like Anduril and Palantir, is branding and ideology: an outpost of capital for outsiders and entrepreneurs, especially those having a defence, surveillance, and digital sovereignty affinity.

Though they've deposited funds into the bank, Luckey and Lonsdale won't likely directly operate Erebor. It will be led by co-CEOs Jacob Hirshman, formerly of crypto company Circle, and Owen Rapaport, who co-founded Aer Compliance. President Mike Hagedorn is a seasoned Valley National Bank veteran.

Digital-first, regulation-forward

Based in Columbus, Ohio, with a second office in New York, Erebor's vision is to be a digital bank only—no branches, app or web. What's interesting, though, is that it wants to become "the most regulated entity" in stablecoin territory. Erebor wants to make US dollar-backed digital assets possible without going very far from the regulator's directions, such as providing compliant access to the American financial system for non-US firms.

The app illustrates Erebor's emphasis on extending credit and banking services to businesses "not well served by traditional or disruptive financial institutions." Much of the bank's organization remains under wraps, from its equity strategy to full shareholder roster, but it is positioning itself as compliant, safe nexus between crypto, defence technology, and banking.

A new playbook for crypto and national interest

Erebor's ambition foreshadows a shift in the trajectory of how financial services can expand with new technology and geopolitical needs. With increased attention to Chinese tech and global security threats, uniting crypto, defence, and venture capital into a banking startup reflects a bigger goal: offer American startups building "national interest" technologies the capital tools they need—unencumbered by legacy banks.

If approved, Erebor would not only revolutionize how crypto and startup businesses bank in the US but also redefine the limits of how inextricably banking, technology, and political worldview can align with one another in a new era of digital finance.