On July 3, several mainstream financial media outlets confirmed that Peter Thiel is partnering with tech billionaires Palmer Luckey and Joe Lonsdale to launch a new bank named Erebor. The group has formally applied to the Office of the Comptroller of the Currency (OCC) for a national bank charter. The bank's target customers are focused on cryptocurrency, AI, defense, and manufacturing startups that mainstream banks are unwilling to serve. Erebor aims to become an alternative to Silicon Valley banks following recent closures.

OCC Reveals Erebor's Application for a New Bank Charter

Behind "Lonely Mountain," Who Is Calling the Shots?

In Tolkien's lore, Erebor, also known as the "Lonely Mountain," is an underground kingdom built by dwarves, holding vast amounts of gold and treasures, but later occupied by the dragon Smaug. Throughout "The Hobbit," the Lonely Mountain symbolizes not only wealth but also the struggle for order, sovereignty, and reconstruction.

Image of the Palantir crystal ball from the movie "The Lord of the Rings," and Palantir's Logo

The selection of "Erebor" as the name for this new bank was not a coincidence. It continues Peter Thiel's consistent naming scheme: his investment firm Palantir, meaning "magic crystal ball" from "The Lord of the Rings," also includes Valar Ventures corresponding to the "Valar" and Rivendell Capital to "Rivendell," alluding to Middle-earth references.

The founders of this bank also exhibit a distinct "Silicon Valley political-capital crossover" characteristic:

Peter Thiel (Co-founder of PayPal and Palantir, Head of Founders Fund)

Palmer Luckey (Founder of Oculus, Co-founder of Anduril)

Joe Lonsdale (Co-founder of Palantir, Founder of 8VC)

All three were significant political donors to Trump in the 2024 U.S. presidential election and have close ties to the recently proposed "GENIUS Act" in Congress.

According to Erebor's application submitted to the Office of the Comptroller of the Currency (OCC), Founders Fund will participate as the primary capital backer, with the three founders not involved in day-to-day management but serving on the board of directors. The bank's management will be led by former advisors from Circle and the CEO of compliance software company Aer Compliance, aiming to clearly delineate the boundaries between politics and operations, emphasizing its positioning as an institutionalized financial institution within the new financial order.

In this nested structure of nomenclature, capital, and politics, Erebor's establishment is not only a cultural symbol choice but also a signal—it hopes to be seen as a central asset in the new financial order, aligning with the mainstream regulatory system while retaining the independence of its technical capital within institutional boundaries.

Related reading: "Silicon Valley Turns Right: Peter Thiel, A16Z, and the Political Ambitions of Cryptocurrency"

Post-SVB, Erebor Rises Again

In March 2023, Silicon Valley Bank (SVB) declared bankruptcy due to asset-liability mismatch and a liquidity crisis, becoming the second-largest bank bankruptcy case in US financial history. Following the incident, deposits of several crypto enterprises like Circle, BlockFi, and Avalanche were frozen, triggering systemic panic, with the price of Bitcoin falling below $20,000. The SVB event became a turning point in the rupture of the Silicon Valley financial ecosystem, prompting several initiators of Erebor to launch an independent banking plan.

SVB's assets were later acquired by First Citizens, with some executives transitioning to HSBC USA, partially continuing service capabilities. However, for many early-stage tech companies, the original account services, credit support, and risk tolerance mechanisms were difficult to replicate. Erebor's bank application explicitly states that its target customers include tech companies "rejected by mainstream banks due to SVB's bankruptcy," covering cryptocurrency firms (including trading, custody, settlement), AI startups, defense tech firms, mid- to high-end manufacturing startups, as well as these companies' employees, investors, and foreign entities.

Differing from the SVB model, Erebor proposes to adopt a 1:1 reserve system and restrict the loan-to-deposit ratio to below 50% to avoid maturity mismatches and credit expansion risks. Its documents show that stablecoins will be a core part of its business, with USDC, DAI, RLUSD, among others, potentially within its custody scope, aiming to become "the most compliant stablecoin trading institution," providing fiat on/off ramps and asset custody services under compliance requirements.

Additionally, Erebor's three main initiators—Palmer Luckey, Joe Lonsdale, and Peter Thiel—were all key donors to the 2024 Trump campaign, having contributed to multiple Republican political action committees. Their direct political ties to the core proponents of the GENIUS Act also positioned the Erebor project for explicit institutional endorsement as the policy window opened. This "financial vacuum + policy expectation + high-risk clientele" triple structure provided Erebor's application with both a practical impetus and a designed path.

S.394 - 2025 GENIUS Act

Crypto Bank, Thiel's Long-standing Plan

Behind Erebor, one of the most noteworthy forces is Founders Fund—an established venture capital firm led by Peter Thiel and a direct investor in this banking project.

Peter Thiel and Founders Fund

Founded in 2005 by Peter Thiel, Ken Howery, and Luke Nosek, Founders Fund was one of Silicon Valley's earliest venture capital firms to adopt "non-consensus investing" as a strategic direction. The fund's early investments include Facebook, SpaceX, Palantir, Stripe, Airbnb, and Lyft, leaving a significant mark on the Web2 and deep tech landscapes.

Differing from most mainstream VCs, Founders Fund explicitly champions "anti-utopian technological idealism," preferring to invest in areas where policy and institutions are not yet established, particularly in regulatory gray zones like defense tech, AI, bioengineering, and crypto assets.

In the crypto space, the fund has invested in infrastructure projects such as Anchorage Digital (the first digital asset custody institution to receive a national bank charter), LayerZero, BitGo, Ramp Network, EigenLabs, exemplifying a "institutional crossover" approach in the American crypto- financialization path.

Founders Fund has also attracted attention due to its strong political stance. Co-founder Peter Thiel has long supported the American conservative movement, being a key donor to Trump's 2016 and 2024 campaigns, and actively participating in policy discourses against regulation and the mainstream central banking system. The fund is not only a direct investor in Erebor but also a key intermediary in facilitating its alignment with the political group behind the "GENIUS Act."

The emergence of Erebor has been seen by the outside world as a financial hub-like extension of this network: it not only provides digital asset settlement and custody services but also seeks to, within the federal regulatory framework, legally onboard a group of "excluded from mainstream banks" emerging enterprise clients—many of which are long-term targets supported by the Founders Fund ecosystem, including AI, defense, biotechnology, and high-volatility crypto industries. With the backdrop of the "GENIUS Act" and the new SEC chairman pushing for "stablecoin re-regulation," Erebor is highly likely to strive to become one of the first "dollar intermediary banks" to compliantly custody mainstream stablecoins such as USDC and RLUSD, providing a federal clearing path for stablecoins.

This is not just the birth of a new bank but more like a "built-in institutional" logic dominated by venture capital: Founders Fund is not betting on a financial institution but is establishing a controlled financial order interface to construct an independent, transcending existing financial structures stable pivot point for its dominant technological empire system. If Erebor is licensed and operates successfully, it could become the first financial middle platform built by venture capital, cutting through policy windows, and serving "intra and extra-institutional businesses."

The Competitive Landscape and Future Challenges of Crypto Banks

Erebor's competition is not easy. As the US regulatory environment gradually becomes clear, the crypto industry is entering a new window of "compliance banking," with a group of players with different positioning accelerating their layouts:

Anchorage Digital is the first crypto custody institution to receive a national bank charter, emphasizing government cooperation and institutional asset services;

Circle has applied for a trust bank charter, focusing on USDC reserve custody and circulation clearing;

Ripple plans to use the RLUSD stablecoin to build a new cross-border settlement network and simultaneously apply for a federal bank charter;

In addition, state trust banks such as Custodia Bank, Paxos Trust, etc., are also exploring stablecoin financial services linked to the dollar through different paths.

In contrast, Erebor's differentiation lies in its application for a full-fledged national bank charter and explicitly including "stablecoin trading and custody" in its core business scope. This naturally gives it the qualification for interstate operations and comprehensive compliance, with its service target no longer limited to the digital asset industry but expanded to high-risk client groups such as AI, defense, biotechnology, traditionally seen as "high-risk" by traditional banks. Compared to the custody-focused model of institutions like Anchorage, Erebor is more like wanting to build a "commercial bank platform" that supports crypto and high-tech companies; and compared to roles targeting the B2B circulation market like Circle, Ripple, Erebor is trying to establish a financial node with a higher regulatory level and higher entry threshold within the federal system.

In short, Erebor is not just another "fill-in" in the crypto banking landscape; it is an "institutional-level sprint" that seeks to differentiate itself in everything from licensing choice, asset structure, to target clientele. In the future, it may not only compete for customer resources with other crypto banks, but also deeply intertwine with the Fed-led payment system and stablecoin legislative processes, becoming one of the most emblematic attempts in this round of "digital dollar" institutional evolution.

Thiel's Erebor not only aims to help AI companies manage money, but it aims to become the "interface of the future" in finance—operating between traditional banks and crypto assets, between national regulation and technological autonomy.

If successful, it will not only custody stablecoins—it will custody a conduit for future "digital power."

After all, in Middle-earth, dwarves indeed could forge a kingdom of their own.

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