A team-up of Silicon Valley titans and tech billionaires is making moves to revolutionize banking for the crypto age.
Led by PayPal co-founder Peter Thiel and defense technology pioneer Palmer Luckey, this group is establishing Erebor, a specialized commercial bank designed to serve the underbanked sectors of cryptocurrency, artificial intelligence, defense technology, and manufacturing startups that traditional financial institutions have largely avoided.
The ambitious project represents a direct response to the massive gap left by Silicon Valley Bank’s spectacular collapse in March 2023. SVB’s implosion—the second-largest banking failure in US history—left countless crypto companies and venture-backed startups scrambling for financial services.
The initiative has attracted heavyweight backing from some of Silicon Valley’s most influential figures. Alongside Thiel’s Founders Fund, the project includes Palantir co-founder Joe Lonsdale and Anduril’s Palmer Luckey as key supporters.
The timing couldn’t be more opportune. Under President Trump’s administration, the cryptocurrency sector has experienced renewed momentum, with the recent passage of the GENIUS Act providing a comprehensive framework for stablecoins while additional crypto-friendly legislation is expected to become law later this year.
Post-SVB Landscape
Erebor’s formation represents more than just market opportunity—it’s a strategic response to a fundamental shift in how technology companies access capital. Traditional banks have become increasingly risk-averse when dealing with crypto companies, AI startups, and defense contractors, creating a substantial underserved market that Erebor plans to capture.
The bank’s approach mirrors SVB’s former model but with crucial improvements learned from that institution’s failures. Unlike SVB’s heavy concentration in low-yield bonds that ultimately triggered its downfall, Erebor plans to incorporate stablecoins directly into its balance sheet.
Erebor’s planned focus on AI, manufacturing, and defense technology startups addresses another crucial gap in the market. These sectors often face unique regulatory challenges and capital requirements that traditional banks struggle to understand or accommodate.
Erebor’s Heavyweight Lineup
The bank’s leadership team brings complementary expertise essential for navigating this complex landscape. Hirshman’s background with Circle provides direct insight into stablecoin operations and crypto regulatory compliance, while Rapaport’s experience with Argus brings institutional-grade risk management capabilities.
The bank’s management structure reflects its crypto-native approach, with co-CEOs Owen Rapaport, co-founder of compliance software firm Argus, and Jacob Hirshman, a former Circle adviser who brings valuable stablecoin expertise to the venture.
The broader market context supports Erebor’s thesis. Cryptocurrency investment activity has surged following Trump’s inauguration, with renewed merger and acquisition activity and a developing crypto IPO boom. This momentum, combined with improving regulatory clarity, creates an ideal environment for a crypto-friendly bank to establish itself and grow rapidly.
Erebor’s success could catalyze broader changes in the banking industry, potentially encouraging traditional institutions to reconsider their approach to crypto and emerging technology companies. For now, the bank represents a bold bet that the future of finance lies in embracing rather than avoiding the technologies reshaping the global economy.