Crypto Bank Backed By Trump Ally Receives Green Light From US Regulators

A new cryptocurrency bank has emerged in the form of Erebor, a company backed by a group of tech billionaires, including Peter Thiel, a figure with ties to President Donald Trump’s administration. After receiving regulatory approval for the launch, the bank seeks to address the gap left by the collapse of Silicon Valley Bank (SVB).

Erebor receives preliminary approval

According to its banking charter application, Erebor intends to serve companies within the US “innovation economy,” particularly technology companies focused on cryptocurrencies, artificial intelligence (AI), defense, and manufacturing.

A source close to Erebor He said The Financial Times noted the bank’s commitment to being a stable and reliable institution, saying: “We want to be a stable, low-risk, reliable bank that does normal banking things without spoiling everyone with unnecessary risks.”

Erebor received “in principle and conditional” approval from regulators on Wednesday, just four months after submitting its application for a national banking charter in June.

This approval reflects the administration’s initiative to reduce regulatory barriers and encourage new entrants into the market Banking sectorespecially those focused on cryptocurrencies, as part of the president’s vision to make America the cryptocurrency capital of the world.

OCC support for crypto banking institutions

Despite the bank’s ties to the political scene in the United States, one of its representatives explained that there was no “special treatment” from the Trump administration during the approvals process.

Adam Cohen, a partner at the law firm Skadden who brought Erebor’s case Implementing the bank charterrecently moved to the Office of the Comptroller of the Currency (OCC) as senior advisor to OCC Chairman Jonathan Gould.

In a statement on Wednesday, Gould noted that Erebor was the first neobank to receive initial conditional approval since his appointment, reinforcing that the OCC under his leadership is ready to support banks involved in cryptocurrency activities.

Erebor is backed by capital of $275 million, with the majority of regulatory capital retained and not allocated to spot operations. The founders plan to seek additional funding in the future to accelerate expansion.

The bank will be headquartered in Columbus, Ohio, with a secondary office in New York, but will provide digital-only customer service, marketing its offerings through a smartphone app and website.

Warren calls Erebor a ‘risky project’

According to the Financial Times, Erebor plans to merge stablecoins in its operations, in line with the Trump administration’s recent repeal of rules that prevented banks from participating in stablecoin transactions.

A source close to Erebor noted that the bank’s quick approval reflects its “very conservative business plan,” stressing that it will not operate as a “foolish, technical crypto bank.”

However, the approval has drawn criticism, especially from Senator Elizabeth Warren, the leading Democrat on the Senate Banking Committee. She called Erebor “a risky project that could lead to another bailout funded by American taxpayers.”

Erebor will be led by CEO Owen Rappaport, co-founder of Erebor Digital asset software company Aer Compliance, and Chief Strategy Officer Jacob Hirschman, who previously worked as an advisor at cryptocurrency firm Circle.

Mike Hagedorn, who previously served as senior executive vice president at New Jersey-based Valley National Bank, will serve as president of the bank.

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