In the U.S., it’s a great time to make bank (as in literally make a new bank).
What happened: Banking startup Erebor received preliminary approval from regulators to operate as a bank in the U.S. The digital-only service has pitched itself as a successor to the dearly departed Silicon Valley Bank, except less risk-hungry and with a focus on stablecoins.
- Erebor was founded by Palmer Luckey, co-founder of defence company Anduril, and is backed by VC firms connected to the likes of Palantir co-founders Peter Thiel and Joe Lonsdale.
- And like Anduril and Palantir, the name Erebor is a reference to J.R.R. Tolkien’s Middle Earth books (we’re asking these guys to find another reference point).
Big picture: Erebor’s speedy approval — which took only four months — is a sign of things to come. The White House is on a mission to reduce banking regulations, and part of that is lowering barriers to entry for new banks, especially those with crypto top of mind.
- It also doesn’t hurt if the banks are backed by Trump pals. Luckey reportedly sent a memo to potential investors saying his “political network” would ensure a quick approval.
- Others that have applied for U.S. banking charters this year include crypto firm Circle and payments platform Wise. Next up could be Coinbase and *sigh* MrBeast.
Why it matters: One could argue that embracing new crypto-forward banks keeps systems up to date. That said, a flood of unproven banks is extremely risky; if any of these lenders fail, it could create an SVB-like ripple effect across the global banking system.—QH
